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Subscription Agreement

This is an actual contract between N2k and AOL.
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Sectors: Retail, Internet, Media
Governing Law: New York, View New York State Laws
Effective Date: October 22, 1997
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COMMON STOCK SUBSCRIPTION AGREEMENT


SUBSCRIPTION AGREEMENT, dated as of October 22, 1997 (this "Agreement"), between N2K Inc., a Delaware corporation (the "Company") and America Online, Inc., a Delaware corporation ("AOL").


WHEREAS, AOL wishes to subscribe for and purchase, and the Company wishes to issue and sell, to AOL 169,779 shares (the "Shares")of common stock of the Company ("Common Stock") on the terms set forth herein; and


WHEREAS, the parties originally agreed to include the Shares in the S-1 Registration Statement filed by the Company with the Securities and Exchange Commission (the "Commission") in connection the Company's initial public offering, but upon review the staff of the Commission determined that the Shares could not be so registered; and


WHEREAS, the staff of the Commission advised the Company that it could proceed to effect the purchase and sale of the Shares in the manner contemplated by the Agreement and would accept for filing a registration statement of the Company registering the re-sale of the Shares by AOL in the manner contemplated by Section 3 of the Registration Rights Agreement between the Company and AOL of even date herewith; and


WHEREAS, both AOL and N2K desire that AOL purchase the Shares, with the same economic terms and conditions for both parties as those set forth in the letter agreement between the parties dated September 16, 1997 (the "September 16 Agreement"), prior to its amendment by letter agreement between the parties dated October 16, 1997 and to otherwise place AOL in the same position AOL would have been in had AOL purchased the Shares as contemplated by the September 16 Agreement; and


WHEREAS, both AOL and the Company desire that the Company issue a warrant certificate to AOL for the future purchase of up to 184,736 additional shares of Common Stock (the "Warrant Certificate") in conjunction with the purchase 2 of the Shares, with the same economic terms and conditions for both parties as those set forth in the September 16 Agreement and to otherwise place AOL in the same position AOL would have been in had AOL received the Warrant Certificate as contemplated by the September 16 Agreement; and


WHEREAS, in connection therewith, the Company and AOL have agreed to enter into an agreement providing for certain registration rights for the Shares and the shares of Common Stock underlying the Warrant Certificate (the "Warrant Shares")(the "Registration Rights Agreement"); and


WHEREAS, in connection therewith, the Company and AOL have agreed to escrow the Purchase Price (as hereinafter defined) to be paid for the Shares in a segregated account with AOL and at the time the obligation of the Company for the Repurchase of the Shares (as defined in Section VIII.1 hereof) is first available to AOL, for AOL to place the Purchase Price it holds in the segregated account and for the Company to place any additional amount necessary from time to time to fully satisfy the obligation to Repurchase the Shares (in an amount not to exceed $7,500,000))in an escrow account with a third party escrow agent and pursuant to an escrow agreement, in each case reasonably satisfactory to AOL; and


WHEREAS, in connection therewith, AOL has agreed to enter into an agreement with the representatives of the underwriters for the Company's initial public offering restricting the sale or other disposition of the Shares for a period of 180 days, in such form as entered into by the Company's officers, directors and other holders of the Company's Common Stock (the "Lock Up Agreement");


NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto hereby agree as follows:


ARTICLE I


SUBSCRIPTION FOR COMMON STOCK


Section I.1 The Common Stock. The Company has authorized the issuance and sale pursuant to this Agreement of the Shares and the simultaneous issuance of the Warrant Certificate to AOL. Subject to the terms and conditions of


2 3 this Agreement, AOL hereby irrevocably subscribes for and agrees to purchase the Shares for an aggregate purchase price of $3,000,000. AOL shall not be obligated to purchase any of the Shares unless the conditions set forth in Article III hereof shall have been satisfied or waived by AOL on or prior to the Closing Date. The Company shall not be obligated to sell any of the Shares to AOL unless the conditions set forth in Article IV hereof shall have been satisfied or waived on by the Company or prior to the Closing Date.


ARTICLE II


CLOSING


The closing (the "Closing") of the transactions contemplated by this Agreement shall take place as follows:


(i) Subject to the terms and conditions of this Agreement
and on the basis of the representations and warranties herein set forth,
the Company will sell to AOL, and AOL will purchase from the Company, at
the Closing on October 22, 1997 (the "Closing Date"), 169,779 shares of
Common Stock in exchange for payment of an aggregate purchase price of
$3,000,000, (the "Purchase Price"), which the Company hereby authorizes
and directs be held in a segregated account by AOL until such time as the
Shelf Registration Statement (as that term is defined in the Registration
Rights Agreement of even date herewith) is declared effective and is
available for offers and sale of all Shares by AOL pursuant thereto, at
which point it shall be paid to or at the direction of the Company, or
until the parties agree to establish an escrow account as contemplated by
the seventh recital to this Agreement in which case it shall be deposited
with the escrow agent under the terms of those arrangements.


(ii) At the Closing, subject to the terms and conditions of
this Agreement and on the basis of the representations and warranties
herein set forth, the Company will deliver to, AOL or at the direction of,
AOL or a representative thereof, a certificate registered in the name of
AOL representing the Shares to be purchased by AOL, against payment of the
Purchase Price by AOL. The Company shall also deliver simultaneously
therewith the Warrant Certificate. The


3 4
Closing will take place at the offices where the closing of the
Company's initial public offering is held in New York, N.Y. at 10:00
a.m., New York time, on the Closing Date.


ARTICLE III


CONDITIONS TO OBLIGATIONS OF THE PURCHASERS


The obligation of AOL to purchase Common Stock under this Agreement is subject to the satisfaction at or prior to the Closing Date of each of the following conditions:


Section III.1 Accuracy of Representations and Warranties. All representations and warranties of the Company contained herein shall be true and correct in all material respects on and as of the Closing Date as if made on and as of the Closing Date.


Section III.2 Performance of Agreements; Regulatory Approvals. (i) The Company shall have performed all obligations and agreements, and complied with all covenants and conditions contained in this Agreement to be performed or complied with by it prior to or at the Closing Date.


(ii) The Company shall have executed and delivered the Registration Rights Agreement.


(iii) The Company shall have executed and delivered the Warrant Certificate.


(iv) The Company shall have obtained all corporate authorizations and approvals and all consents and approvals of regulatory bodies and authorities necessary to issue the Shares and the Warrant Certificate and to enter into and perform this Agreement, the Registration Rights Agreement and the Warrant Certificate and to consummate the transactions contemplated hereby and thereby.


Section III.3 Consummation of IPO. The Company shall have consummated an initial public offering of Company common stock pursuant to a registration statement (Registration No. 333-33105) on Form S-1 filed with the Securities and Exchange Commission on October 15, 1997 (the


4 5 "IPO").


Section III.4 Delivery of Certificates. At the Closing, the Company shall deliver to AOL a certificate signed by a senior executive officer of the Company certifying as to each of the matters set forth in Sections III.1, III.2 and III.3 and the Company shall deliver all other certificates customarily delivered in transactions of this type.


Section III.5 Opinion of Dewey Ballantine LLP. Dewey Ballantine LLP, special counsel for the Company, shall have delivered to AOL an opinion dated the Closing Date in substantially the form attached as Annex I hereto.


If at or prior to the Closing all of the conditions of this Article III have not been satisfied, AOL may elect to waive such conditions or to be relieved of all further obligations hereunder.


ARTICLE IV


CONDITIONS TO THE
COMPANY'S OBLIGATIONS


The obligation of the Company to issue and sell the Common Stock under this Agreement is subject to the satisfaction at the Closing Date of each of the following conditions:


Section IV.1 Accuracy of Representations and Warranties. All representations and warranties of AOL contained herein shall be true and correct in all material respects on and as of the Closing Date as if made on and as of the Closing Date.


Section IV.2 Performance of Agreements. AOL shall have performed all obligations and agreements, and complied with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to or at the Closing Date.


Section IV.3 Payment for the Common Stock. AOL shall have delivered to the Company and the Company shall have received full payment of the Purchase Price of the Shares.


5 6
Section IV.4 Lock Up Agreement. AOL shall have executed and delivered the Lock Up Agreement.


ARTICLE V


REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY


The Company represents, warrants and covenants to AOL as of the date of this Agreement and as of the Closing Date as follows:


Section V.1 Due Organization, Valid Existence and Authority of the Company and the Initial Subsidiaries. The Company has been duly incorporated and is validly existing and in good standing under the laws of the State of Delaware. The Company has full right, power and authority to carry on its business as conducted and as proposed to be conducted. The Company has full right, power and authority to enter into this Agreement, the Registration Rights Agreement and the Warrant Certificate and perform its obligations hereunder and thereunder.


Section V.2 Authorization and Validity of Agreements. This Agreement, the Registration Rights Agreement and the Warrant Certificate have been duly authorized and constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms.


Section V.3 No Conflict with Other Instruments; No Approvals Required Except as Have Been Obtained. The execution and delivery of this Agreement, the Registration Rights Agreement and the Warrant Certificate by the Company and compliance by the Company with the terms and conditions hereof and thereof, will not violate, with or without the giving of notice or the lapse of time, or both, or require any registration, qualification, approval or filing under, any provision of law, statute, ordinance or regulation applicable to the Company and will not conflict with, or require any consent or approval under, or result in the breach or termination of any provision of, or constitute a default under, or result in the acceleration of the performance of the obligations of the Company under, or result in the creation of any claim, lien, charge or encumbrance upon any of the properties, assets or businesses


6 7 of the Company pursuant to the Certificate of Incorporation or By-laws of the Company or any order, judgment, decree, law, ordinance or regulation applicable to the Company, or any contract, instrument, agreement or restriction to which the Company is a party or by which the Company or any of its assets or properties is bound.


Section V.4 Additional Representations and Warranties. All representations and warranties of the Company contained in that certain Underwriting Agreement, dated October 17, 1997 (the "Underwriting Agreement"), between the Company and PaineWebber Incorporated and Unterberg Harris, as representatives of the several underwriters named therein (the "Underwriters"), except those that refer specifically to the Underwriting Agreement or arrangements with the Underwriters that are not germane to the placement of the Shares (other than those related generally to the IPO), are incorporated herein by reference.


Section V.5 Lock Up of Other Shareholders. More than 90% of the other holders of the Company's Common Stock, and all of the officers and directors of the Company, have entered into agreements with the underwriters of the IPO restricting the sale of their shares in substantially the same form as the Lock Up Agreement.


Section V.6 Private Placement. The offer and sale of the Shares and the Warrant Certificate by the Com
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