EXECUTION
STOCK PURCHASE AGREEMENT
AMONG
MICROLEAGUE MULTIMEDIA, INC.,
HEARST CORPORATION
AND
AMERITECH CORPORATION
_______________________________________
252,633 SHARES OF COMMON STOCK
_______________________________________
Dated as of
June 6, 1997
TABLE OF CONTENTS PAGE
ARTICLE I - PURCHASE AND SALE OF SHARES 1
Section 1.1 Purchase and Sale 1
Section 1.2 Closing 1
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF COMPANY 2
Section 2.1 Organization 2
Section 2.2 Subsidiaries 2
Section 2.3 Authorization 2
Section 2.4 Capitalization 2
Section 2.5 Financial Statements 3
Section 2.6 No Violation 3
Section 2.7 Consents 3
Section 2.8 Litigation, Orders 3
Section 2.9 Securities Laws 4
Section 2.10 Disclosure 4
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF
THE INVESTORS 4
Section 3.1 Investment Intent, Etc. 4
Section 3.2 Sales of Company Securities 5
Section 3.3 Authorization 6
Section 3.4 No Violation 6
ARTICLE IV - CONDITIONS TO OBLIGATIONS OF THE INVESTORS 6
Section 4.1 Representations and Warranties 6
Section 4.2 No Proceeding or Litigation 6
Section 4.3 No Injunction 7
Section 4.4 Resolutions of the Company 7
Section 4.5 Incumbency Certificate 7
Section 4.6 Opinion of Counsel 7
Section 4.7 Consummation of Acquisition of KidSoft 7
ARTICLE V - CONDITIONS TO OBLIGATIONS OF THE COMPANY 7
Section 5.1 Representations and Warranties 7
Section 5.2 No Proceeding or Litigation 7
Section 5.3 No Injunction 7
ARTICLE VI - SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION 8
Section 6.1 Survival of Representations 8
Section 6.2 Indemnification 8
Section 6.3 Conditions of Indemnification 8
ARTICLE VII - REGISTRATION RIGHTS 9
Section 7.1 Piggyback Registration Rights 9
Section 7.2 Withdrawal of Shares. 9
Section 7.3 Information Regarding Investors;
Underwriting Arrangements 9
Section 7.4 Restrictions on Sales 10
Section 7.5 Indemnification 10
ARTICLE VIII - MISCELLANEOUS 12
Section 8.1 Expenses 12
Section 8.2 Further Assurances 12
Section 8.3 Parties in Interest 12
Section 8.4 Entire Agreement, Amendments and Waiver 12
Section 8.5 Headings 12
Section 8.6 Notices 12
Section 8.7 Governing Law 13
Section 8.8 Third Parties 13
Section 8.9 Counterparts 13
ARTICLE IX - DEFINED TERMS 14
Section 9.1 Location of Certain Defined Terms 14
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of June 6, 1997,
among MicroLeague Multimedia, Inc., a Pennsylvania corporation (the
"Company"), Hearst Corporation, a Delaware corporation ("Hearst"), and
Ameritech Corporation, a Delaware corporation ("Ameritech," and, collectively
with Hearst, the "Investors").
RECITALS
--------
Hearst and Ameritech indirectly hold significant membership interests in
KidSoft, LLC ("KidSoft"). Pursuant to an acquisition agreement (the
"Acquisition Agreement") among the Company, KidSoft, L.L.C., Hearst,
Ameritech, KidSoft Holdings, Inc., Ameritech KidSoft Holdings, Inc., KidSoft,
Inc. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ of even date herewith, the Company
has agreed to acquire all of the outstanding membership interests of KidSoft.
As a condition to such acquisition, the Investors have agreed to purchase from
the Company an aggregate of 252,633 shares of common stock, par value $.01
per share (the "Common Stock"), of the Company.
Accordingly, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
---------------------------
Section 1.1 Purchase and Sale. Subject to the terms and conditions
set forth herein and in reliance on the representations, warranties and
covenants set forth herein, at the Closing (as defined herein), (a) the
Company shall issue and sell to Hearst, and Hearst shall purchase from the
Company, the number of shares of Common Stock, rounded up to the nearest whole
share, having a market value equal to $800,000, and (b) the Company shall
issue and sell to Ameritech, and Ameritech shall purchase from the Company,
the number of shares of Common Stock, rounded up to the nearest whole share,
having a market value equal to $400,000 (collectively, the "Shares"). For
purposes of this Agreement, the market value of the Common Stock shall be
calculated based on the average of the last sale prices of the Common Stock as
reported on the National Association of Securities Dealers Automated Quotation
System for the five consecutive trading days immediately preceding the Closing
Date (as defined herein), or, if no sale occurs on any such day, the average
of the closing bid and asked price on such day as so reported.
Section 1.2 Closing.
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(a) Subject to Article IV, the purchase and sale of the Shares
will take place at a closing (the "Closing") at the offices of Klehr,
Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇, to commence at 10:00 A.M. on June 6,
1997, or on such other date as the Company and the Investors shall agree,
which shall be the date on which the closings under the Acquisition Agreement
occur. The date and time of Closing are referred to herein as the "Closing
Date."
(b) At the Closing, each Investor shall deliver by wire
transfer, to such account of the Company as the Company shall direct at least
one business day before the Closing Date, same day funds in an amount equal to
the purchase price of the Shares being purchased by such Investor; provided,
however, the purchase price payable by Ameritech hereunder shall be reduced by
$200,000, representing the amount contributed by Ameritech to KidSoft, LLC
prior to the Closing pursuant to Section 12.10 of the Acquisition Agreement.
(c) At the Closing, the Company shall deliver to each Investor
against payment of the purchase price therefor, a certificate representing
such Investor's Shares. The certificates representing such Shares shall be
registered in the name of such Investor or its nominee.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
-----------------------------------------
The Company represents and warrants to the Investors as follows:
Section 2.1 Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. The Company has all requisite power and
authority to own, operate and lease its properties and to conduct its business
as currently conducted. The Company is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which its ownership
or leasing of property or the conduct of its business requires such licensing
or qualification, except to the extent that the failure to be so qualified or
licensed would not have a Material Adverse Effect. The Company has delivered
to the Investors complete and correct copies of its articles of incorporation
and by-laws, each as in effect on the date hereof. As used in this Agreement,
"Material Adverse Effect" means with respect to the Company, any Subsidiary or
an Investor, any material adverse effect on the operations, condition
(financial or other), assets, liabilities, earnings or prospects of such
entity or on the transactions contemplated hereby.
Section 2.2 Subsidiaries. Each of AbleSoft, Inc., REP Acquisition
Corporation, and REP Holdings Company, Inc. (the "Subsidiaries") is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each Subsidiary has all requisite power and
authority to own, operate and lease it properties and to conduct its business
as currently conducted. Each Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction is which its ownership
or leasing of property or the conduct of its business requires such licensing
or qualification, except to the extent that the failure to be so qualified
would not have a Material Adverse Effect. The Company is the sole record
owner of all of the outstanding capital stock of each Subsidiary.
Section 2.3 Authorization. The Company has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement and the performance
by the Company of its obligations hereunder have been duly authorized by the
Board of Directors of the Company and no other proceeding therefor on the part
of the Company or its shareholders is required. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by the Investors, is a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
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Section 2.4 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of
10,000,000 shares of Common Stock and of which 4,568,740 shares are issued and
outstanding and 1,000,000 shares of preferred stock, $.01 par value, none of
which are outstanding. Except as set forth on Schedule 2.4, the Company has
not issued and is not obligated to issue any warrants, options or other rights
to purchase or acquire any shares of its capital stock, or any securities
convertible into any such shares or any warrants, options or other rights to
acquire any such convertible securities.
(b) All of the Shares have been duly authorized and, when issued
in accordance with the term of this Agreement will be, validly issued, fully
paid and nonassessable and will not be subject to any preemptive rights.
Except as set forth in Schedule 2.4, there are no preemptive rights, rights of
first refusal, put or call rights or obligations, or anti-dilution rights with
respect to the issuance, sale or redemption of the capital stock of the
Company.
Section 2.5 Financial Statements. The Company has previously
delivered to each Investor complete and correct copies of the Company's
audited balance sheets, statements of income and statements of cash flows for
each of the years ended December 31, 1994, 1995 and 1996. All such financial
statements were prepared in conformity with generally accepted accounting
principles applied on a consistent basis, are complete, correct and consistent
in all material respects with the books and records of the Company, contain
notations for all significant accruals or contingencies and fairly present the
financial position of the Company as of the dates thereof and the results of
operations and cash flows of the Company for the periods shown therein.
Section 2.6 No Violation. Neither the execution and delivery of
this Agreement by the Company nor the performance by the Company of its
obligations hereunder will (i) conflict with or result in any breach of any
provision of its articles of incorporation or by-laws, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default or give rise to any lien or encumbrance on the
Company's properties or assets or any right of termination, cancellation or
acceleration under any of the terms or conditions of any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which the
Company is a party or by which it or any of its properties or assets may be
bound, or (iii) violate any statute, law, rule, regulation, writ, injunction,
judgment, order or decree of any court, administrative agency or governmental
authority binding on the Company or any of its properties or assets, excluding
from the foregoing clauses (ii) and (iii) violations, breaches and defaults
that, individually and in the aggregate, would not have a Material Adverse
Effect.
Section 2.7 Consents. Except for consents that have been obtained,
no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority or other person
or entity is required to be made or obtained by the Company in connection with
the execution and delivery of this Agreement by the Company or the performance
by the Company of its obligations hereunder, other than such consents,
approvals, authorizations, declarations, filings or registrations, the failure
of which to make or obtain, individually and in the aggregate, would not have
a Material Adverse Effect.
Section 2.8 Litigation, Orders. Except as set forth on Schedule
2.8, there are no claims, actions, suits, proceedings, investigations or
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inquiries pending before any court, arbitrator or governmental or regulatory
official or office, or, to the knowledge of the Company, threatened, against
or affecting the Company or questioning the validity of this Agreement, the
transactions contemplated hereby or any action taken or to be taken by the
Company pursuant to this Agreement, at law or in equity; nor is there any
valid basis for any such claim, action, suit, proceeding, inquiry or
investigation. The Company is not subject to any judgment, order or decree
entered in any lawsuit or proceeding that has had or may have a Material
Adverse Effect.
Section 2.9 Securities Laws. The offer, issuance and sale by the
Company of the Shares pursuant to this Agreement (assuming the accuracy of the
representations and warranties of the Investors contained in Article III) will
be exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and applicable state securities laws.
Section 2.10 Disclosure. The representations and warranties made or
contained in this Agreement, the schedules and exhibits hereto and the
certificates and statements executed or delivered in connection herewith do
not, and the Company's annual report on Form 10-KSB for the year ended
December 31, 1996 (the "Form 10-KSB"), the Company's quarterly report on Form
10-QSB for the quarter ended March 31, 1997 (the "1997 Form 10-QSB") and the
information contained under the heading "Risk Factors" in the draft Private
Placement Memorandum, dated May 1, 1997, relating to the offering by the
Company of convertible preferred stock did not, as of the respective dates
thereof, 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 such
representations, warranties or other material not misleading. No event has
occurred and nothing material has come to the attention of the Company that
would indicate that any of such information (together with any written updates
thereof furnished by the Company, including information in the 1997 Form
10-QSB that updates information in the Form 10-QSB) is not true and correct in
all material respects as of the date hereof. To the knowledge of the Company,
the projections contained in the materials furnished to Investors by the
Company and the assumptions underlying such projections were reasonable when
made and continue to be reasonable, and the projections were based upon good
faith and diligent estimates of the anticipated operating results and
financial condition of the Company. There are no facts known to the Company
that currently or may in the future have a Material Adverse Effect and that
have not been specifically disclosed herein, in a schedule furnished herewith
or in the documents referred to above, other than economic conditions
affecting the industry of the Company generally.
Section 2.11 Other Registration Rights. Except as set forth in this
Agreement, the Acquisition Agreement and Schedule 2.11, the Company is not
obligated to register the offer and sale of any of its outstanding capital
stock or other securities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
-----------------------------------------------
Each Investor represents and warrants to the Company (solely as to
itself) as follows:
Section 3.1 Investment Intent, Etc.
(a) Such Investor is acquiring the Shares to be acquired by it
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hereunder for its own account for investment only and not with a view to or
for sale in connection with the distribution thereof.
(b) Such Investor has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the investment in the Company contemplated by this Agreement and making an
informed investment decision with respect thereto.
(c) Such Investor is an "accredited investor" as such term is
defined in Rule 501 under the Securities Act.
(d) Such Investor has received copies of and has reviewed (i)
the Company's Quarterly Report on Form 10-QSB with respect to the quarter
ended September 30, 1996; (ii) the 1997 Form 10-QSB, (iii) Form 10-KSB; (iv)
a draft, dated May 1, 1997, of the Company's Proxy Statement with respect to
its 1997 annual meeting of shareholders; (v) a draft of the Private Placement
Memorandum of the Company, dated May 1, 1997; and (vi) press releases issued
by the Company since May 23, 1996.
(e) Such Investor understands that certain of the information
provided by the Company in connection with the transactions contemplated
hereby contains forward-looking statements regarding potential future events
and developments affecting the Company's business. Such statements relate to,
among other things, (i) competition for customers for its products and
services; (ii) the uncertainty of developing or obtaining rights to new
products that will be accepted by the market and the timing of the
introduction of new products into the market; (iii) the limited market life of
the Company's products; (iv) the uncertainty of consummating potential
acquisitions or entering into joint ventures; and (v) the availability of
financing to fund working capital and expansion needs. Such Investor further
understands that the Company's ability to predict results or the effect of any
pending events on the Company's operating results is inherently subject to
various risks and uncertainties, including those discussed in the Form 10-KSB
under "Description of Business" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and in the Memorandum under
"Risk Factors". Such Investor further understands that the projected
financial information regarding the Company's future performance is merely an
estimate based on various assumptions concerning the occurrence of future
events, many of which are beyond the Company's control. Accordingly, such
Investor understands that the Company's actual results in all likelihood will
differ from projected results, and such differences may be material.
(f) Such Investor has had the opportunity to ask questions of
and receive answers from the Company concerning its business and operations,
the terms and conditions of the acquisition of securities hereunder, as well
as the opportunity to obtain additional information necessary to verify the
accuracy of information furnished in connection therewith that the Company
possesses or can acquire without unreasonable effort or expense.
(g) Such Investor understands that the Shares to be acquired by
such Investor pursuant to this Agreement have not been registered under the
Securities Act or any state securities laws, and may not be transferred unless
subsequently registered thereunder or pursuant to an exemption from
registration, and that a legend indicating such restrictions will be placed on
the certificates representing such securities.
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Section 3.2 Sales of Company Securities. If the Company determines
to effect a public offering of Common Stock or securities convertible into or
exercisable for Common Stock, upon the request of the managing underwriter for
such offering, such Investor shall not offer or sell, or agree to offer or
sell, any Common Stock or securities convertible into or exercisable for
Common Stock during the period requested by such underwriter, which shall not
exceed 180 days.
Section 3.3 Authorization. Such Investor has all requisite power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement and the
performance by such Investor of its obligations hereunder have been duly
authorized by the Board of Directors of Investor. This Agreement has been
duly executed and delivered by such Investor and, assuming the due
authorization, execution and delivery hereof by the Company, is a valid and
binding obligation of such Investor, enforceable against Investor in
accordance with its terms.
Section 3.4 No Violation. Neither the execution and delivery of
this Agreement by such Investor nor the performance by it of its obligations
hereunder will (i) conflict with or result in any breach of any provision of
the certificate of incorporation or by-laws of such Investor, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default or give rise to any lien or encumbrance on any of
their respective properties or assets or any right of termination,
cancellation or acceleration under any of the terms or conditions of any note,
bond, mortgage, lease, license, agreement or other instrument or obligation to
which Investor is a party or by which Investor or any of its properties or
assets may be bound, or (iii) violate any statute, law, rule, regulation,
writ, injunction, judgment, order or decree of any court, administrative
agency or governmental authority binding on such Investor or any of its
properties or assets, excluding from the foregoing clauses (ii) and (iii)
violations, breaches and defaults that, individually and in the aggregate,
would not have a Material Adverse Effect on Investor.
ARTICLE IV
CONDITIONS TO OBLIGATIONS OF THE INVESTORS
------------------------------------------
The obligations of the Investors under this Agreement are subject to the
satisfaction, at or before the Closing, of each of the following conditions:
Section 4.1 Representations and Warranties. The representations and
warranties of the Company shall be true and correct in all material respects
as of the date when made and as of the date of Closing as though made at that
time (except for representations and warranties that expressly relate to a
different date) and the Company shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing. The Investors shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated as
of the Closing Date, to the foregoing effect.
Section 4.2 No Proceeding or Litigation. There shall not be
threatened, instituted or pending any suit, action, investigation, inquiry or
other proceeding by or before any court or governmental or other regulatory or
administrative agency or commission requesting or looking toward an order,
6
judgment or decree that (a) restrains or prohibits the consummation of any of
the transactions contemplated hereby or (b) could have a Material Adverse
Effect on the Company.
Section 4.3 No Injunction. On the Closing Date, there shall be no
effective injunction, writ, preliminary restraining order or other order
issued by a court of competent jurisdiction restraining or prohibiting the
consummation of the transactions contemplated hereby.
Section 4.4 Resolutions of the Company. The Company shall have
executed and delivered to the Investors copies of resolutions of the Company's
Board of Directors, certified by the Secretary of the Company as in full force
and effect on the Closing Date, authorizing, among other things, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
Section 4.5 Incumbency Certificate. The Company shall have
delivered to each Investor a certificate of the Secretary of the Company,
dated as of the Closing Date, as to the incumbency and signatures of the
officers of the Company executing this Agreement and the related certificates.
Section 4.6 Opinion of Counsel. Each Investor shall have received
from Klehr, Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇, counsel to the Company, an
opinion, dated as of the Closing Date, in form and substance reasonably
satisfactory to such Investor, with respect to the matters set forth in
Section 2.1, 2.2, 2.3, 2.4, 2.6, 2.7, 2.8 and 2.9.
Section 4.7 Consummation of Acquisition of KidSoft. The
transactions contemplated by the Acquisition Agreement shall have been
consummated or shall be consummated simultaneously with the transactions
contemplated hereby.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF THE COMPANY
Section 5.1 Representations and Warranties. The representations and
warranties of each Investor shall be true and correct in all material respects
as of the date when made and as of the date of the Closing as though made at
that time (except for representations and warranties that expressly relate to
a different date) and the Investors shall have performed, satisfied and
complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Investors at or prior to the Closing. The Company shall have
received a certificate, executed by the Chief Executive Officer of each
Investor (or other officer reasonably acceptable to the Company), dated as of
the Closing Date, to the foregoing effect.
Section 5.2 No Proceeding or Litigation. There shall not be
threatened, instituted or pending any suit, action, investigation, inquiry or
other proceeding by or before any court or governmental or other regulatory or
administrative agency or commission requesting or looking toward an order,
judgment or decree that restrains or prohibits the consummation of any of the
transactions contemplated hereby.
Section 5.3 No Injunction. On the Closing Date, there shall be no
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effective injunction, writ, preliminary restraining order or other order
issued by a court of competent jurisdiction restraining or prohibiting the
consummation of the transactions contemplated hereby.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
--------------------------------------------
Section 6.1 Survival of Representations. All representations,
warranties and agreements made by any party to this Agreement or pursuant
hereto shall survive the Closing and any investigation made by or on behalf of
any party hereto for a period of one year following the Closing Date.
Section 6.2 Indemnification. Subject to the terms and conditions of
this Article VI, the Company shall indemnify, defend and hold harmless each
Investor, each person who controls such party within the meaning of the
Exchange Act, and each of the respective partners, officers, directors,
employees and agents of the foregoing in their respective capacities as such
(collectively, the "Indemnified Parties") from and against all demands,
claims, assessments, losses, damages, liabilities, costs and expenses,
including interest, penalties and reasonable attorneys' fees and expenses
(collectively, "Damages"), asserted against, resulting to, imposed upon or
incurred by any such Investor Indemnified Party, directly or indirectly, by
reason of or resulting from a breach of any representation, warranty or
agreement of the Company contained in or made pursuant to this Agreement
(each, a "Claim"); provided, however, the Company's liability pursuant to this
Section 6.2 and the Acquisition Agreement shall not exceed, in the aggregate,
$2,000,000.
Section 6.3 Conditions of Indemnification. The obligations of the
Company to indemnify the Indemnified Parties under Section 6.2 with respect to
Claims made by third parties shall be subject to the following terms and
conditions:
(a) The Indemnified Party shall give the Company prompt notice
of any such Claim, and the Company shall have the right to undertake the
defense thereof by representatives chosen by it;
(b) If the Company, within a reasonable time after notice of any
such Claim, fails to defend any Indemnified Party against which such Claim has
been asserted, such Indemnified Party shall (upon further notice to the
Company) have the right to undertake the defense, compromise or settlement of
such Claim on behalf of and for the account and risk of the Company, subject
to the right of the Company to assume the defense of such Claim at any time
prior to settlement, compromise or final determination thereof; and
(c) Anything in this Section 6.3 to the contrary
notwithstanding, (i) if there is a reasonable probability that a Claim may
materially and adversely affect an Indemnified Party other than as a result of
money damages or other money payments, such Indemnified Party shall have the
right, at its own cost and expense, to defend, compromise or settle such
Claim; provided, however, that if such Claim is settled without the Company's
consent (which consent shall not be unreasonably withheld) such Indemnified
Party shall be deemed to have waived all rights hereunder against the Company
for money damages arising out of such Claim, and (ii) the Company shall not,
without the written consent of such Indemnified Party, settle or compromise
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any Claim or consent to the entry of any judgment that does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to such
Indemnified Party a release from all liability in respect to such Claim.
ARTICLE VII
REGISTRATION RIGHTS
-------------------
Section 7.1 Piggyback Registration Rights. If, at any time, the
Company proposes to register any shares of Common Stock under the Securities
Act other than pursuant to a registration effected to implement (a) an
employee benefit plan or (b) a transaction to which Rule 145 or any similar
rule of the SEC under the Securities Act applies, whether or not for sale for
its own account, the Company shall give written notice thereof to the
Investors and upon the written request of any Investor, given within 15 days
after the receipt of any such written notice, the Company will include in such
registration statement any or all of the shares of Common Stock acquired
pursuant to this Agreement then owned by such Investor or acquired by such
Investor upon the exercise of warrants of the Company issued in connection
with the transactions contemplated hereby; provided, however, that (i) the
maximum number of shares to be sold shall not exceed the number which the
managing underwriter considers, in good faith, to be appropriate based on
market conditions and other relevant factors (including pricing); and (ii) if
the total number of shares desired to be sold exceeds such amount, the Company
shall be entitled to include in such registration statement the full amount of
shares that it desires to include, and the Investors, together with any other
shareholders who elect to participate in the offering, shall be entitled to
sell up to any remaining amount of shares pro rata in proportion to the number
of shares requested to be included therein.
Section 7.2 Withdrawal of Shares. If the number of shares to be
included in a registration statement pursuant to this Article VII is reduced
as provided in Section 7.1, any Investor that previously had elected to
participate in such offering may withdraw its shares from such registration
statement by giving written notice to such effect to the Company at any time
prior to the effective date thereof. At any time prior to such effective
date, the Company shall have the right to withdraw such registration statement
for any reason whatsoever.
Section 7.3 Information Regarding Investors; Underwriting
Arrangements.
(a) Each Investor participating in a registration hereunder
shall furnish to the Company such information regarding such Investor and the
distribution of such Investor's securities as the Company may from time to
time request in order to comply with the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder. Each
Investor shall notify the Company as promptly as practicable of any inaccuracy
or change in information previously furnished by such Investor to the Company
or of the happening of any event as a result of which any prospectus relating
to such registration contains an untrue statement of a material fact regarding
such Investor or the distribution of such securities or omits to state any
material fact regarding such Investor or the distribution of such securities
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and
shall promptly furnish to the Company any additional information required to
correct or update any previously furnished information or required so that
such prospectus shall not contain, with respect to such Investor or the
distribution of such securities, an untrue statement of a material fact or
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omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(b) Each Investor participating in a registration hereunder
shall, if requested by the Company or the managing underwriter(s) in
connection with such registration, (i) subject to Section 7.4, agree to sell
its shares on the basis provided in any underwriting arrangements entered into
in connection therewith and (ii) complete and execute all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
customary in similar offerings.
Section 7.4 Restrictions on Sales. In connection with any
registration under this Article VII, no Investor shall sell any shares of
Common Stock or securities convertible into or exercisable for Common Stock,
except pursuant to such registration, for the period following the effective
date of the applicable registration statement that the managing underwriter of
the offering determines is necessary to effect the offering, which period
shall not exceed 180 days.
Section 7.5 Indemnification.
(a) Indemnification by the Company. In connection with any
registration pursuant to this Section 7, the Company shall indemnify, defend
and hold harmless each Investor participating in such registration, each
person who controls such Investor within the meaning of the Securities Act,
and each of the partners, officers, directors, employees and agents of the
foregoing in their respective capacities as such (the "Indemnitees"), to the
full extent lawful, from and against all actions, suits, claims, proceedings,
costs, damages, judgments, amounts paid in settlement and expenses (including,
without limitation, reasonable attorneys' fees and disbursements), whether
joint or several (collectively, a "Loss"), to which any such Indemnitee may
become subject under the Securities Act or any other statute or common law,
insofar as any such Loss may arise out of or be based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered, any
preliminary, final or summary prospectus contained therein, or any amendment
or supplement thereto, or in any filing made in connection with the
qualification of the offering under blue sky or other securities laws of
jurisdictions in which the Registrable Securities are offered ("Blue Sky
Filing"), or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading and the Company will reimburse each Indemnitee for any
legal or other expenses reasonably incurred in connection with investigating
or defending such Loss; provided, however, that such indemnification covenant
shall not (i) apply to any Loss arising out of, or based upon, any such untrue
statement or alleged untrue statement, or any such omission or alleged
omission, if such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of such Indemnitee for use in connection with preparation of the registration
statement, any preliminary prospectus or final prospectus contained in the
registration statement, any such amendment or supplement thereto or any Blue
Sky Filing or (ii) inure to the benefit of any Indemnitee to the extent that
any such Loss arises out of such Indemnitee's failure to send or give a copy
of the final prospectus, as the same may be then supplemented or amended, to
the person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the
sale of the securities to such person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of any
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Indemnitee and shall survive the transfer of such securities by any
Indemnitee.
(b) Indemnification by the Sellers. As a condition to including
any securities in any registration statement filed pursuant to Section 7.1,
the Company shall have received an undertaking satisfactory to it from the
prospective seller of such securities to indemnify, defend and hold harmless
(in the same manner and to the same extent as set forth in subsection (a) of
this Section 7.5) the Company, each director of the Company, each officer of
the Company and each other person, if any, who controls the Company within the
meaning of the Securities Act, with respect to any untrue statement or alleged
untrue statement in, or omission or alleged omission from, such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein or any Blue Sky Filing, or any amendment or supplement
thereto, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such seller for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; provided, however, in
no event shall the liability of any seller under this paragraph (b) exceed the
net proceeds received by such seller (after the payment of underwriting
discounts and commissions) from the sale of its securities pursuant to such
registration statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any
such director, officer or controlling person and shall survive the transfer of
such securities by such seller.
(c) Notices of Claims. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim hereunder, such indemnified party shall, if a claim in respect thereof
is to be made against an indemnifying party, give written notice to the latter
of the commencement of such action, provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Section 7.5 unless the
indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, the indemnifying
party shall be entitled to participate in and, unless a conflict of interest
between such indemnified and indemnifying parties exists in respect of such
claim, to assume the defense thereof, jointly with any other indemnifying
party similarly notified to the extent that the indemnifying party may wish,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof. In the event
that the indemnifying party advises an indemnified party that it will contest
a claim for indemnification hereunder, or fails, within 30 days of receipt of
any indemnification notice to notify, in writing, such person of its election
to defend, settle or compromise any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then
the indemnified party may, at its option, defend, settle or otherwise
compromise or pay such action or claim with the consent of the indemnifying
party, which consent shall not be unreasonably withheld. The indemnified
party shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party
and shall furnish to the indemnifying party all information reasonably
available to the indemnified party that relates to such action or claim. The
indemnifying party shall keep the indemnified party fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. If the indemnifying party elects to defend any such action
or claim, then the indemnified party shall be entitled to participate in such
defense with counsel of its choice at its sole cost and expense. If the
indemnifying party does not assume such defense, the indemnified party shall
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keep the indemnifying party apprised at all times as is reasonably practicable
as to the status of the defense. No indemnifying party shall be liable for
any settlement of any action, claim or proceeding effected without its written
consent; provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall,
without the consent of the indemnified party (not to be unreasonably
withheld), consent to entry of any judgment or enter into any settlement that
does not include as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Expenses. Each party hereto shall pay all fees and
expenses incurred by it in connection with the negotiation and execution of
this Agreement and the consummation of the transactions contemplated hereby.
Section 8.2 Further Assurances. From time to time, at the Company's
request and without further consideration, each party hereto shall execute and
deliver to the Company such documents and take such other action as the
Company may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
Section 8.3 Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective successors
and permitted assigns of the parties hereto. The rights and obligations of
the parties hereto hereunder may not be assigned without the consent of the
other parties hereto.
Section 8.4 Entire Agreement, Amendments and Waiver.
(a) This Agreement, the exhibits, the schedules and other
writings referred to herein or delivered pursuant hereto that form a part
hereof contain the entire understanding of the parties with respect to its
subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
(b) This Agreement may be amended only by a written instrument
duly executed by the parties. Any condition to a party's obligations
hereunder may be waived in writing by such party to the extent permitted by
law.
Section 8.5 Headings. The Article and Section headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 8.6 Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, by telex or facsimile
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transmission or mailed (registered or certified mail, postage prepaid, return
receipt requested) as follows:
If to the Company to: MicroLeague Multimedia, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Klehr, Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Hearst : The Hearst Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
If to Ameritech: Ameritech Corporation
▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Assistant General Counsel - Transactions
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above,
provided that notice of a change of address shall be deemed given only upon
receipt.
Section 8.7 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania with regard to its or any other jurisdiction's conflicts of law
rules.
Section 8.8 Third Parties. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person, other
than the parties hereto and their successors or permitted assigns, any rights
or remedies under or by reason of this Agreement.
Section 8.9 Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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ARTICLE IX
DEFINED TERMS
-------------
Section 9.1 Location of Certain Defined Terms. The following terms
used in this Agreement are defined in the Section indicated below:
Term Section
---- -------
Acquisition Agreement Forepart
Agreement Forepart
Ameritech Forepart
Blue Sky Filing 7.5(a)
Claim 6.2
Closing 1.2
Closing Date 1.2
Common Stock 1.2
Company Forepart
Company Indemnified Party 6.2
Damages 6.2
Exchange Act 6.2
Hearst Forepart
Indemnified Party 6.3
Indemnitees 7.5(a)
Investor Indemnified Parties 6.2
Investors Forepart
KidSoft Forepart
Loss 7.5(a)
Material Adverse Effect 2.1
Memorandum 2.10
Securities Act 2.9
Subsidiaries 2.2
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
MICROLEAGUE MULTIMEDIA, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
HEARST CORPORATION
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
AMERITECH CORPORATION
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary
