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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 24, 1998
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THE LEARNING COMPANY, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-12375 94-2562108
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(Commission File Number) (IRS Employer Identification No.)
One Athenaeum Street, Cambridge, Massachusetts 02142
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(Address of principal executive offices) (Zip Code)
(617) 494-1200
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Registrant's Telephone Number, Including Area Code
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. OTHER EVENTS.
On July 30, 1998, The Learning Company, Inc., a Delaware corporation
(the "Registrant"), entered into an Underwriting Agreement with Tribune Company
and Smith Barney, Inc., as representative of the several underwriters named in
Schedule I attached thereto, relating to the sale by Tribune Company of 6 1/4%
Exchangeable Notes due August 15, 2001, which are subject to exchange into
shares of common stock, $.01 par value per share (the "Common Stock"), of the
Registrant (the "Tribune Shares"). The Tribune Shares are included in a
Registration Statement on Form S-3 (File No. 333-02385), as amended, filed by
the Registrant under the Securities Act of 1933, as amended (the "Act").
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) See Exhibit Index attached hereto.
Item 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
On July 24, 1998, the Registrant issued 4,404 shares of the
Registrant's Common Stock (the "Shares") to four foreign investors (the
"Sellers") in connection with the Registrant's purchase of a Norwegian software
distribution company.
The Registrant has relied upon the exemption from registration under
Regulation S promulgated under the Act. The basis for this exemption is the
representation that the Sellers are not "U.S." persons within the meaning of
Regulation S and the Shares will not be offered or sold in the United States or
to a "U.S." person unless covered by an effective registration statement or an
applicable exemption from the registration requirement of the Act is available.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 3, 1998 THE LEARNING COMPANY, INC.
(Registrant)
By: /s/ Neal S. Winneg
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Neal S. Winneg
Senior Vice President and General Counsel
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EXHIBIT INDEX
Exhibit
Number Description
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1 Underwriting Agreement, dated July 30, 1998, by and among Tribune
Company, The Learning Company, Inc. and Smith Barney, Inc., as
representative of the several underwriters named on Schedule I
attached thereto.
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EXHIBIT 1
Tribune Company
4,600,000 DECS(SM) (Debt Exchangeable for Common Stock(SM)*1
6 1/4% Exchangeable Notes Due August 15, 2001
(Subject to Exchange into Shares of Common Stock,
par value $.01 per share, of The Learning Company, Inc.)
Underwriting Agreement
New York, New York
July 30, 1998
Salomon Smith Barney
Smith Barney Inc.
As Representative of the several Underwriters,
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Tribune Company, a Delaware corporation (the "Company"), proposes to sell
to the several underwriters named in Schedule I hereto (the "Underwriters"), for
whom you (the "Representatives") are acting as representatives, an aggregate of
4,600,000 DECS (Debt Exchangeable for Common Stock) consisting of its 6 1/4%
Exchangeable Notes Due August 15, 2001 (the "Underwritten DECS"), to be issued
under an indenture dated as of January 1, 1997 between the Company and Bank of
Montreal Trust Company, as trustee (the "Trustee"), as supplemented to the date
hereof (as so supplemented, the "Indenture"). The Company also proposes to grant
to the Underwriters an option to purchase up to 610,796 additional DECS to cover
over-allotments (the "Option DECS"; the Option DECS, together with the
Underwritten DECS, being hereinafter called the "DECS"). At maturity (including
as a result of acceleration or otherwise), the DECS will be mandatorily
exchanged by the Company into shares of common stock, par value $.01 per share
(the "Learning Common
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* Plus an option to purchase from Tribune Company, up to 610,796 additional
DECS to cover over-allotments/
"DECS" and "Debt Exchangeable For Common Stock" are service marks of
Salomon Brothers Inc.
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Stock"), of The Learning Company, a Delaware corporation ("TLC") (or, at the
Company's option, the cash equivalent and/or such other consideration as
permitted or required by the terms of the DECS) at the exchange rate specified
in the Company Prospectus (as defined herein). To the extent there are no
additional Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and the terms
Representatives and Underwriters shall mean either the singular or plural as the
context requires. Any reference herein to the Company Registration Statement, a
Company Preliminary Prospectus, the Company Prospectus, the TLC Registration
Statement, the TLC Preliminary Prospectus or the TLC Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 which were filed under the Exchange Act on or before the
Effective Date of the Company Registration Statement or the TLC Registration
Statement or the issue date of such Company Preliminary Prospectus, Company
Prospectus, TLC Preliminary Prospectus or TLC Prospectus, as the case may be;
and any reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Company Registration Statement, any Company Preliminary
Prospectus, the Company Prospectus, the TLC Registration Statement, the TLC
Preliminary Prospectus or the TLC Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the Effective
Date of the Company Registration Statement or the TLC Registration Statement, as
the case may be, or the issue date of any Company Preliminary Prospectus or the
Company Prospectus or any TLC Preliminary Prospectus or the TLC Prospectus, as
the case may be, deemed to be incorporated therein by reference.
In connection with the foregoing, TLC has filed with the Commission a
post-effective amendment to registration statement with respect to 5,210,796
shares and a prospectus supplement thereto relating to 4,600,000 of such shares
(the "Underwritten Shares") of Learning Common Stock, in respect of the
Underwritten DECS plus an additional 610,796 shares (the "Option Shares" and,
together with the Underwritten Shares, the "Shares") of Learning Common Stock in
respect of the Option DECS, for delivery by the Company pursuant to the DECS,
which registration statement is referred to in Section 2 of this Agreement.
Certain terms used herein are defined in Section 18 hereof.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each Underwriter and TLC as set
forth below in this Section 1.
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(a) The Company meets the requirements for use of Form S-3 under the
Act and has prepared and filed with the Commission a registration statement
(file number 333-18921) on Form S-3, including a related preliminary
prospectus, for the registration under the Act of the offering and sale of
the Company's debt securities. The Company may have filed one or more
amendments thereto, including a related preliminary prospectus, each of
which has previously been furnished to you. The Company will next file with
the Commission one of the following: either (1) prior to the Effective Date
of such registration statement, a further amendment to such registration
statement, (including the form of final prospectus), (2) after the
Effective Date of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b), or (3) a final prospectus in
accordance with Rules 415 and 424(b). In the case of clause (2), the
Company has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information) required
by the Act and the rules thereunder to be included in such registration
statement and the Company Prospectus. As filed, such amendment and form of
final prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, and, except
to the extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior to
the Execution Time or, to the extent not completed at the Execution Time,
shall contain only such specific additional information and other changes
(beyond that contained in the latest Company Preliminary Prospectus) as the
Company has advised you, prior to the Execution Time, will be included or
made therein. If the Company Registration Statement contains the
undertaking specified by Regulation S-K Item 512(a), the Company
Registration Statement, at the Execution Time, meets the requirements set
forth in Rule 415(a)(1)(x).
(b) (i) On the Effective Date, (ii) when the Company Prospectus is
first filed (if required) in accordance with Rule 424(b), (iii) when,
prior to the Closing Date (as defined herein), any amendment to the Company
Registration Statement becomes effective (including the filing of any
document incorporated by reference in the Company Registration Statement),
(iv) when any supplement to the Company Prospectus is filed with the
Commission and (v) on the Closing Date and on any date on which Option DECS
are purchased, if such date is not the Closing Date (a "settlement date"):
(x) the Company Registration Statement, as amended as of any such time, the
Company Prospectus, as amended or supplemented as of any such time,
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and the Indenture will comply in all material respects with the applicable
requirements of the Act, the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), and the Exchange Act and the respective rules
thereunder, (y) the Company Registration Statement, as amended as of any
such time, will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading and (z) the Company
Prospectus, as amended or supplemented as of any such time, will not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to (x)
that part of the Company Registration Statement which shall constitute the
Statement of Eligibility (Form T-1) under the Trust Indenture Act of the
Trustee or (y) any information contained in or omitted from the Company
Registration Statement or the Company Prospectus or any amendment thereof
or supplement thereto in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter
through the Representatives specifically for use in connection with the
preparation of the Company Registration Statement and the Company
Prospectus.
(c) As of the date hereof and at the Closing Date:
(i) each of the Company and Chicago Tribune Company, Sentinel
Communications Company, Sun-Sentinel Company and Tribune
Broadcasting Company (individually, a "Designated Subsidiary" and
collectively, the "Designated Subsidiaries") has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is
chartered or organized, with full corporate power and authority to
own its properties and conduct its business as described in the
Company Prospectus, and is duly qualified or licensed to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction where the character of the properties
owned or leased or the nature of the activities conducted by such
corporations, respectively, makes such qualifications or
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licensing necessary, and where the failure to be so qualified or
licensed might materially adversely affect the financial condition,
assets, operations or prospects of the Company and its subsidiaries
considered as one enterprise;
(ii) all the outstanding shares of capital stock of each
Designated Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as
otherwise set forth in the Company Prospectus, all outstanding
shares of capital stock of the Designated Subsidiaries are owned by
the Company either directly or through wholly owned subsidiaries
free and clear of any perfected security interest and any other
security interests, claims, liens or encumbrances;
(iii) the Indenture has been duly authorized, and prior to the
Closing will be executed and delivered and will constitute a legal,
valid and binding instrument enforceable against the Company in
accordance with its terms (subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally from time to time
in effect and to general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or
at law)); the Indenture has been duly qualified under the Trust
Indenture Act; and the DECS have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the purchasers thereof,
will constitute legal, valid and binding obligations of the
Company, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws of
general applicability relating to or affecting the enforcement of
creditors' rights or by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding
in equity or at law)
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and will be entitled to the benefits of the Indenture;
(iv) the financial statements of the Company and its
consolidated subsidiaries included or incorporated by reference in
the Company Prospectus present fairly the financial position of the
Company and such consolidated subsidiaries as at the dates
indicated and the results of their operations for the periods
specified; except as stated therein, said financial statements have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis;
(v) to the best knowledge of the Company, there is no pending
or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving
the Company or any of the Designated Subsidiaries of a character
required to be disclosed in the Company Registration Statement
which is not adequately disclosed in the Company Prospectus, and
there is no franchise, contract or other document of a character
required to be described in the Company Registration Statement or
the Company Prospectus, or to be filed as an exhibit, which is not
described or filed as required;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) no consent, approval, authorization or order of any
court or governmental agency or body, domestic or foreign, is
required for the consummation of the transactions contemplated
herein except such as have been obtained under the Act and such as
may be obtained under the blue sky laws of any jurisdiction in
connection with the sale of the DECS as contemplated by this
Agreement and such other approvals as have been obtained; and
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(viii) none of the execution of the Indenture, the issuance
and sale of the DECS, the consummation of any other of the
transactions herein contemplated or the fulfillment of the terms
hereof will conflict with, result in a breach of or constitute a
default under the charter or by-laws of the Company or the terms of
any material indenture or other material agreement or instrument to
which the Company or any of the Designated Subsidiaries is a party
or bound, or any material order, decree, rule or regulation known
to the Company to be applicable to the Company or any of its
Designated Subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator, domestic or
foreign, having jurisdiction over the Company or any of its
Designated Subsidiaries.
(d) The Company confirms as of the date hereof, and at the Closing
Date, that the Company is in compliance with all provisions of Section 1 of
Laws of Florida, Chapter 92-198, An Act Relating to Disclosure of Doing
Business with Cuba, and the Company further agrees that if it commences
engaging in business with the government of Cuba or with any person or
affiliate located in Cuba after the date the Company Registration Statement
becomes or has become effective with the Commission or with the Florida
Department of Banking and Finance (the "Department"), whichever date is
later, or if the information reported in the Company Prospectus, if any,
concerning the Company's business with Cuba or with any person or affiliate
located in Cuba changes in any material way, the Company will provide the
Department notice of such business or change, as appropriate, in a form
acceptable to the Department.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters at the closing of the
offering of the DECS shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
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2. Representations and Warranties of TLC. TLC represents and warrants
to, and agrees with, each Underwriter and the Company as set forth below in this
Section 2.
(a) TLC Company meets the requirements for use of Form S-3 under the
Act and has prepared and filed with the Commission a registration statement
(file number 333-02385) on Form S-3, including a related preliminary
prospectus, for the registration under the Act of the offering and sale of
the Shares. TLC may have filed one or more amendments thereto, including a
related preliminary prospectus, each of which has previously been furnished
to you. TLC will next file with the Commission one of the following: either
(1) prior to the Effective Date of such registration statement, a further
amendment to such registration statement, (including the form of final
prospectus), (2) after the Effective Date of such registration statement, a
final prospectus in accordance with Rules 430A and 424(b), or (3) a final
prospectus in accordance with Rules 415 and 424(b). In the case of clause
(2), TLC has included in such registration statement, as amended at the TLC
Effective Date, all information (other than Rule 430A Information) required
by the Act and the rules thereunder to be included in such registration
statement and the TLC Prospectus. As filed, such amendment and form of final
prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, and, except
to the extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior to
the Execution Time or, to the extent not completed at the Execution Time,
shall contain only such specific additional information and other changes
(beyond that contained in the latest TLC Preliminary Prospectus) as the TLC
has advised you, prior to the Execution Time, will be included or made
therein. If the TLC Registration Statement contains the undertaking
specified by Regulation S-K Item 512(a), the TLC Registration Statement, at
the Execution Time, meets the requirements set forth in Rule 415(a)(1)(x).
(b) On the TLC Effective Date, the TLC Registration Statement did or
will, and when the TLC Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date and on any date on which Option
DECS are purchased, if such date is not the Closing Date (a "settlement
date"), the TLC
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Prospectus (and any supplements thereto) will, comply in all material
respects with the applicable requirements of the Act and the Exchange Act
and the respective rules thereunder; on the TLC Effective Date and at the
Execution Time, the TLC Registration Statement did not or will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and, on the TLC Effective Date, the TLC Prospectus,
if not filed pursuant to Rule 424(b), will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date and any settlement
date, the TLC Prospectus (together with any supplement thereto) will not,
include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that TLC makes no representations or warranties as to the information
contained in or omitted from the TLC Registration Statement, or the TLC
Prospectus (or any supplement thereto) in reliance upon and in conformity
with information furnished herein or in writing to TLC (x) by or on behalf
of any Underwriter through the Representatives or (y) by the Company, in
either case, specifically for inclusion in the TLC Registration Statement or
the TLC Prospectus (or any supplement thereto).
(c) Each of TLC and its domestic "significant subsidiaries" within the
meaning of Regulation S-X as shown on Exhibit A (the "TLC Subsidiaries") has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered or
organized with full corporate power and authority to own or lease, as the
case may be, and to operate its properties and conduct its business as
described in the TLC Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification, and where the failure to be
so qualified or licensed might materially adversely affect the financial
condition, assets, operations or prospects of TLC and its subsidiaries
considered as one enterprise;
(d) all the outstanding shares of capital stock of each TLC Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the TLC Prospectus, all
outstanding shares of capital stock of the TLC Subsidiaries are owned by the
Company either directly or through wholly owned subsidiaries free and clear
of any perfected security interest or any
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other security interests, claims, liens or encumbrances other than security
interests held by certain banks;
(e) TLC's authorized equity capitalization is as set forth in the TLC
Prospectus; the capital stock of TLC conforms in all material respects to
the description thereof contained in the TLC Prospectus; the outstanding
shares of capital stock of TLC have been duly and validly authorized and
issued and are fully paid and nonassessable; the Shares are duly listed, and
admitted and authorized for trading on the NYSE; and the holders of
outstanding shares of capital stock of TLC are not entitled to preemptive or
other rights to subscribe for the Shares.
(f) There is no franchise, contract or other document of a character
required to be described in the TLC Registration Statement or TLC
Prospectus, or to be filed as an exhibit thereto, which is not described or
filed as required.
(g) This Agreement has been duly authorized, executed and delivered by
TLC.
(h) TLC is not and, after giving effect to the offering and sale of the
DECS and the Shares, will not be an "investment company" as defined in the
Investment Company Act of 1940, as amended.
(i) No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein in respect of TLC and the TLC Subsidiaries,
except such as have been obtained under the Act and such as may be required
under the blue sky laws of any jurisdiction in connection with the purchase
and distribution of the DECS by the Underwriters in the manner contemplated
herein and in the Company Prospectus.
(j) Neither the execution, delivery and performance of this Agreement
by TLC and the consummation of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any property
or assets of TLC or any of its subsidiaries pursuant to, (i) the charter or
by-laws of TLC or any of its subsidiaries, (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note
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agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which TLC or any of its subsidiaries is a party or
bound or to which its or their property is subject, or (iii) any statute,
law, rule, regulation, judgment, order or decree applicable to TLC or any of
its subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over
TLC or any of its subsidiaries or any of its or their properties.
(k) The consolidated historical financial statements and schedules of
the TLC and its consolidated subsidiaries included in the TLC Prospectus and
the TLC Registration Statement present fairly in all material respects the
financial condition, results of operations and cash flows of TLC as of the
dates and for the periods indicated, comply as to form with the applicable
accounting requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein). The
selected consolidated financial data set forth under the caption "Selected
Consolidated Financial Data" in the TLC Prospectus and TLC Registration
Statement fairly present, on the basis stated in the TLC Prospectus and the
TLC Registration Statement, the information included therein.
(l) To the best knowledge of TLC, no action, suit or proceeding by or
before any court or governmental agency, authority or body or any arbitrator
involving TLC or any of its subsidiaries or its or their property is pending
or threatened that (i) could reasonably be expected to have a material
adverse effect on the performance of this Agreement or the consummation of
any of the transactions contemplated hereby or (ii) could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of TLC and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the TLC Prospectus (exclusive of any supplement thereto).
(m) PricewaterhouseCoopers LLP, who have certified certain financial
statements of TLC and its consolidated subsidiaries and delivered their
report with respect to the audited consolidated financial statements and
schedules included in the TLC Prospectus, are independent public accountants
with respect to TLC within the meaning of the Act and the applicable
published rules and regulations thereunder.
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(n) TLC has not taken, directly or indirectly, any action designed to
or which has constituted or which might reasonably be expected to cause or
result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of TLC to facilitate the sale or
resale of the DECS.
(o) TLC and its subsidiaries own, possess, license or have other rights
to use, on reasonable terms, all material patents, patent applications,
trade and service marks, trade and service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, know-how and
other intellectual property (collectively, the "Intellectual Property")
necessary for the conduct of TLC's business as now conducted or as proposed
in the TLC Prospectus to be conducted. Except as set forth in the Prospectus
under the caption "Business--Proprietary Rights and Licenses," (a) there is
no material infringement by third parties of any such Intellectual Property;
(b) there is no pending or threatened material action, suit, proceeding or
claim by others challenging TLC's rights in or to any such Intellectual
Property, and TLC is unaware of any facts which would form a reasonable
basis for any such claim; (c) there is no pending or threatened material
action, suit, proceeding or claim by others challenging the validity or
scope of any such Intellectual Property, and TLC is unaware of any facts
which would form a reasonable basis for any such claim; (d) there is no
pending or threatened material action, suit, proceeding or claim by others
that TLC infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of others, and TLC is unaware of
any other fact which would form a reasonable basis for any such claim, in
each case that might adversely affect the financial condition, assets,
operations or prospects of TLC and its subsidiairies considered as one
enterprise.
(p) The statements contained in the TLC Prospectus under the captions
"Risk Factors -- Protection of Proprietary Rights; Risk of Infringement
Claims" and "Business -- Proprietary Rights and Licenses," insofar as such
statements summarize legal matters, agreements, documents, or proceedings
discussed therein, are in all material respects accurate and fair summaries
of such legal matters, agreements, documents or proceedings.
Any certificate signed by any officer of TLC and delivered to the
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Representatives or counsel for the Underwriters in connection with the offering
of the DECS shall be deemed a representation and warranty by TLC, as to matters
covered thereby, to each Underwriter.
3. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of $27.099375 per
DECS, plus accrued interest, if any, on the DECS, the number of DECS set forth
opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not
jointly, up to 610,796 Option DECS at the same purchase price per DECS as
the Underwriters shall pay for the Underwritten DECS, plus accrued interest,
if any. Said option may be exercised only to cover over-allotments in the
sale of the Underwritten DECS by the Underwriters. Said option may be
exercised in whole or in part at any time (but not more than once) on or
before the 30th day after the date of the Company Prospectus upon written or
telegraphic notice by the Representatives to the Company setting forth the
number of Option DECS as to which the several Underwriters are exercising
the option and the settlement date. Delivery of certificates for the Option
DECS by the Company, and payment therefor to the Company, shall be made as
provided in Section 4 hereof. The number of Option DECS to be purchased by
each Underwriter shall be the same percentage of the total number of Option
DECS to be purchased by the several Underwriters as such Underwriter is
purchasing of the Underwritten DECS, subject to such adjustments as you in
your absolute discretion shall make to eliminate any fractional shares.
4. Delivery and Payment. Delivery of and payment for the Underwritten
DECS and the Option DECS (if the option provided for in Section 3(b) hereof
shall have been exercised on or before the third Business Day prior to the
Closing Date) shall be made at 10:00 AM, New York City time, on August 5, 1998,
or at such time on such later date not more than three Business Days after the
foregoing date as the Representatives shall designate, which date and time may
be postponed by agreement
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between the Representatives and the Company or as provided in Section 11 hereof
(such date and time of delivery and payment for the DECS being herein called the
"Closing Date"). Delivery of the DECS shall be made to the Representatives for
the respective accounts of the several Underwriters against payment by the
several Underwriters through the Representatives of the purchase price thereof
to or upon the order of the Company by wire transfer payable in same-day funds
to an account specified by the Company. Delivery of the Underwritten DECS and
the Option DECS shall be made through the facilities of The Depository Trust
Company unless the Representatives shall otherwise instruct.
The Company agrees to have the DECS available for inspection, checking
and packaging by the Representatives in New York, New York, not later than 1:00
p.m. on the business day prior to the Closing Date.
If the option provided for in Section 3(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Company will deliver the
Option DECS to the Representatives on the date specified by the Representatives
(which shall be within three Business Days after exercise of said option) for
the respective accounts of the several Underwriters, against payment by the
several Underwriters through the Representatives of the purchase price thereof
to or upon the order of the Company by wire transfer payable in same-day funds
to an account specified by the Company. If settlement for the Option DECS occurs
after the Closing Date, the Company will deliver to the Representatives on the
settlement date for the Option DECS, and the obligation of the Underwriters to
purchase the Option DECS shall be conditioned upon receipt of, supplemental
opinions, certificates and letters confirming as of such date the opinions,
certificates and letters delivered on the Closing Date pursuant to Section 8
hereof.
5. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the DECS for sale to the public as set forth in
the Company Prospectus.
6. Agreements of the Company. The Company agrees with the several
Underwriters and TLC that:
<PAGE> 15
15
(a) The Company will use its reasonable best efforts to cause the
Company Registration Statement, if not effective at the Execution Time, and
any amendment thereof, to become effective. Prior to the termination of the
offering of the DECS, the Company will not file any amendment of the Company
Registration Statement or supplement to the Company Prospectus or any Rule
462(b) Company Registration Statement unless the Company has furnished you a
copy for your review prior to filing and, prior to the termination of the
offering of the DECS, will not file any such proposed amendment or
supplement to which you reasonably object. Subject to the foregoing
sentence, if the Company Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Company Prospectus is
otherwise required under Rule 424(b), the Company will cause the Company
Prospectus, properly completed, and any supplement thereto to be filed with
the Commission pursuant to the applicable paragraph of Rule 424(b) within
the time period prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. The Company will promptly advise the
Representatives (1) when the Company Registration Statement, if not
effective at the Execution Time, shall have become effective, (2) when the
Company Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any Rule
462(b) Company Registration Statement shall have been filed with the
Commission, (3) when, prior to termination of the offering of the
Securities, any amendment to the Company Registration Statement shall have
been filed or become effective, (4) of any request by the Commission or its
staff for any amendment of the Company Registration Statement, or any Rule
462(b) Company Registration Statement, or for any supplement to the Company
Prospectus or for any additional information, (5) of the issuance by the
Commission of any stop order suspending the effectiveness of the Company
Registration Statement or the institution or threatening of any proceeding
for that purpose and (6) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the DECS for sale in
any jurisdiction or the institution or threatening of any proceeding for
such purpose. The Company will use its best efforts to prevent the issuance
of any such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the DECS is required
to be delivered under the Act, any event occurs as a result of which the
Company
<PAGE> 16
16
Prospectus as then supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were
made not misleading, or if it shall be necessary to amend the Company
Registration Statement or supplement the Company Prospectus to comply with
the Act or the Exchange Act or the respective rules thereunder, the Company
promptly will (1) notify the Representatives of such event, (2) prepare and
file with the Commission, subject to the second sentence of paragraph (a) of
this Section 6, an amendment or supplement which will correct such statement
or omission or effect such compliance and (3) supply any supplemented
Company Prospectus to you in such quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements (which need not be audited) of the Company and its subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule 158
under the Act.
(d) The Company will furnish to the Representatives and counsel for the
Underwriters, without charge, a copy of the Company Registration Statement
(without exhibits thereto) and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of each
Company Preliminary Prospectus and the Company Prospectus and any supplement
thereto as the Representatives may reasonably request. The Company will pay
the expenses of printing or other production of the Company Registration
Statement, each Company Preliminary Prospectus and the Company Prospectus.
(e) The Company will arrange, if necessary, for the qualification of
the DECS for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in effect
so long as required for the distribution of the DECS and will pay any fee of
the National Association of Securities Dealers, Inc., in connection with any
review of the offering; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action that would subject it to service of
process in suits, other than those arising out of the offering or sale of
the DECS, in any jurisdiction where it is not now so subject.
<PAGE> 17
17
(f) The Company will not, without the prior written consent of Salomon
Smith Barney, for a period of 60 days following the Execution Time, (i)
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company) or announce the
offering (or plans to make an offering) of, any shares of Learning Common
Stock or any securities convertible into or exercisable or exchangeable for
shares of Learning Common Stock or (ii) enter into any swap or other
agreement that transfers to another, in whole or in part, any of the
economic consequences of the ownership of shares of Learning Common Stock,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of shares of Learning Common Stock or such other
securities, in cash or otherwise.
(g) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected
to cause or result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company or the Learning
Common Stock to facilitate the sale or resale of the DECS, in each case in
violation of applicable law.
(h) Until the Business Day following the Closing Date, the Company will
not, without the consent of Salomon Smith Barney, offer, sell or contract to
sell, or announce the offering of, any debt securities or warrants to
purchase debt securities covered by the Company Registration Statement or
any other registration statement filed under the Act.
7. Agreements of TLC. TLC agrees with the several Underwriters and the
Company that:
(a) TLC will use its reasonable best efforts to cause the TLC
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the DECS, TLC will not file any amendment of the TLC
Registration Statement or supplement to the TLC
<PAGE> 18
18
Prospectus or any Rule 462(b) TLC Registration Statement unless TLC has
furnished you a copy for your review prior to filing and will not file any
such proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, if the TLC Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the TLC
Prospectus is otherwise required under Rule 424(b), TLC will cause the TLC
Prospectus, properly completed, and any supplement thereto to be filed with
the Commission pursuant to the applicable paragraph of Rule 424(b) within
the time period prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. TLC will promptly advise the
Representatives (1) when the TLC Registration Statement, if not effective at
the Execution Time, shall have become effective, (2) when the TLC
Prospectus, and any supplement thereto, shall have been filed (if required)
with the Commission pursuant to Rule 424(b) or when any Rule 462(b) TLC
Registration Statement shall have been filed with the Commission, (3) when,
prior to termination of the offering of the DECS, any amendment to the TLC
Registration Statement shall have been filed or become effective, (4) of any
request by the Commission or its staff for any amendment of the TLC
Registration Statement, or any Rule 462(b) TLC Registration Statement, or
for any supplement to the TLC Prospectus or for any additional information,
(5) of the issuance by the Commission of any stop order suspending the
effectiveness of the TLC Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt by TLC
of any notification with respect to the suspension of the qualification of
the Shares for sale in any jurisdiction or the institution or threatening of
any proceeding for such purpose. TLC will use its best efforts to prevent
the issuance of any such stop order or the suspension of any such
qualification and, if issued, to obtain as soon as possible the withdrawal
thereof.
(b) If, at any time when a prospectus relating to the DECS is required
to be delivered under the Act, any event occurs as a result of which the TLC
Prospectus as then supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were
made not misleading, or if it shall be necessary to amend the TLC
Registration Statement or supplement the TLC Prospectus to comply with the
Act or the Exchange Act or the respective rules thereunder, TLC promptly
will (1) notify the Representatives of such event, (2) prepare and file with
the Commission, subject to the second sentence of paragraph (a) of this
Section 7, an
<PAGE> 19
19
amendment or supplement which will correct such statement or omission or
effect such compliance and (3) supply any supplemented TLC Prospectus to you
in such quantities as you may reasonably request.
(c) As soon as practicable, TLC Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements (which need not be audited) of TLC and its subsidiaries which
will satisfy the provisions of Section 11(a) of the Act and Rule 158 under
the Act.
(d) TLC will furnish to the Representatives and counsel for the
Underwriters, without charge, a copy of the TLC Registration Statement
(without exhibits thereto) and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of each TLC
Preliminary Prospectus and the TLC Prospectus and any supplement thereto as
the Representatives may reasonably request. TLC will pay the expenses of
printing or other production of the TLC Registration Statement, the TLC
Preliminary Prospectus and the TLC Prospectus.
(e) TLC will cooperate with the Company for purposes of the
qualification of the DECS and the Shares for sale under the laws of such
jurisdictions as the Representatives may designate and will maintain such
qualifications in effect so long as required for the distribution of the
DECS and the Shares; provided that in no event shall TLC be obligated to
qualify to do business in any jurisdiction where it is not now so qualified
or to take any action that would subject it to service of process in suits,
other than those arising out of the offering or sale of the DECS, in any
jurisdiction where it is not now so subject.
(f) TLC will not, without the prior written consent of Salomon Smith
Barney, for a period of 60 days following the Execution Time, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of, directly or indirectly, (or
enter into any transaction which is designed to, or might reasonably be
expected to, result in the disposition (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise) by TLC
or any affiliate of TLC) or announce the offering (or plans to make an
offering)
<PAGE> 20
20
of, any shares of Learning Common Stock or any securities convertible into
or exercisable or exchangeable for shares of Learning Common Stock; (ii)
enter into any swap or other agreement that transfers to another, in whole
or in part, any of the economic consequences of the ownership of shares of
Learning Common Stock; or (iii) waive any rights TLC has against any entity
which is an affiliate of TLC which prevents such entity from effecting a
disposition or transfer (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) of the ownership of
Learning Common Stock, or waive any such rights against any entity in
respect of any underwritten offering, whether any such transaction described
in clause (i), (ii) or (iii) above is to be settled by delivery of shares of
Learning Common Stock or such other securities, in cash or otherwise;
provided, however, that (1) TLC may issue shares of Learning Common Stock
directly to shareholders of companies acquired by TLC as consideration for
the acquisition, and in connection therewith announce such issuance or
contemplated issuance; (2) TLC may sell warrants to purchase equity
securities in offerings made pursuant to Canadian law solely to non-U.S.
residents so long as such warrants (or such other securities into which such
warrants are exchangeable or convertible) are not available to be resold in
the United States or to U.S. residents (and TLC takes no action to permit
such resale) until a date that is at least 60 days from the Execution Time;
(3) TLC may exchange the 5 1/2% Senior Convertible Notes due 2000 of TLC
which are outstanding as of the Execution Time by issuing shares of Learning
Common Stock provided such shares are subject to the foregoing restrictions
for the remainder of the 60 day period; (4) TLC may issue shares of Learning
Common Stock pursuant to any stock option plan, equity incentive plan, stock
purchase plan or dividend reinvestment plan of TLC in effect at the
Execution Time or pursuant to any warrant or other equity security
convertible into or exercisable or exchangeable for Learning Common Stock
outstanding at the Execution Time; and (5) in connection with an acquisition
by TLC or any affiliate of TLC, TLC may announce that to finance such
acquisition, TLC is reviewing a number of alternatives, including a debt or
equity offering by TLC.
(g) TLC will take such action as may be reasonably necessary to comply
with the rules and regulations of the NYSE in respect of the offering and
listing of the Shares in connection with the DECS.
<PAGE> 21
21
8. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Underwritten DECS and the Option DECS,
as the case may be, shall be subject to the accuracy of the representations
and warranties on the part of the Company and TLC contained herein as of the
Execution Time, the Closing Date and any settlement date pursuant to Section
4 hereof, to the accuracy of the statements of the Company and TLC made in
any certificates pursuant to the provisions hereof, to the performance by
the Company and TLC in all material respects of their respective obligations
hereunder and to the following additional conditions:
(a) If either of the Company Registration Statement or the TLC
Registration Statement has not become effective prior to the Execution Time,
unless the Representatives agree in writing to a later time, the Company
Registration Statement or the TLC Registration Statement, as the case may
be, will become effective not later than (i) 6:00PM New York City time on
the date of determination of the public offering price, if such
determination occurred at or prior to 3:00PM New York City time on such date
or (ii) 9:30 AM on the Business Day following the day on which the public
offering price was determined, if such determination occurred after 3:00PM
New York City time on such date; if filing of the Company Prospectus or the
TLC Prospectus, or any supplements thereto, is required pursuant to Rule
424(b), the Company Prospectus or the TLC Prospectus, and any such
supplements, will be filed in the manner and within the time period required
by Rule 424(b); and no stop order suspending the effectiveness of the
Company Registration Statement or the TLC Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted
or threatened.
(b) The Company shall have furnished to the Representatives the opinion
of Sidley & Austin, counsel for the Company, dated the Closing Date and
addressed to the Representatives, to the effect that:
(i) each of the Company and the Designated Subsidiaries has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction in which it is
chartered or organized, with full corporate power and authority to
own or lease, as the case may be, and to operate its properties and
conduct its business as described in the Company
<PAGE> 22
22
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction which requires such qualification, except where the
failure to be so qualified or in good standing would not have a
material adverse affect on the Company and its consolidated
subsidiaries considered as one enterprise;
(ii) all the outstanding shares of capital stock of each
Designated Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, to the knowledge
of such counsel, except as otherwise set forth in the Company
Prospectus, all outstanding shares of capital stock of the
Subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest, claim, lien or encumbrance;
(iii) the DECS and the Indenture conform in all material
respects to the description thereof contained in the Company
Prospectus, and the holders of outstanding shares of capital stock
of the Company do not have pre-emptive rights to subscribe for the
DECS;
(iv) the Indenture has been duly authorized, executed and
delivered by the Company, and constitutes a legal, valid and
binding instrument enforceable against the Company in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws of
general applicability relating to or affecting the enforcement of
creditors' rights or by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding
in equity or at law); the Indenture has been duly qualified under
the Trust Indenture Act; and the DECS have been duly authorized
and, when executed and authenticated in accordance with the
provisions of the Indenture and the procedures adopted by the Board
of Directors of the Company and the Special Committee thereof and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will constitute legal, valid and binding obligations of
the Company, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws of
general applicability relating to or affecting the enforcement of
creditors'
<PAGE> 23
23
rights or by the effect of general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity
or at law) and will be entitled to the benefits of the Indenture;
(v) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving
the Company or any of its Designated Subsidiaries or its or their
property of a character required to be disclosed in the Company
Registration Statement which is not disclosed in the Company
Prospectus as so required, and to the knowledge of such counsel,
there is no franchise, contract or other document of a character
required to be described in the Company Registration Statement or
Company Prospectus, or to be filed as an exhibit thereto, which is
not described or filed as required; and the statement included or
incorporated in the Company Prospectus with respect to any such
action, suit, proceeding, franchise, contract or other document
fairly summarize the matters therein described;
(vi) the Company Registration Statement has become effective
under the Act; any required filing of the Company Prospectus, and
any supplements thereto, pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b); to
the knowledge of such counsel, no stop order suspending the
effectiveness of the Company Registration Statement has been issued
and no proceedings for that purpose have been instituted or
threatened; and the Company Registration Statement and the Company
Prospectus as of their respective effective or issue dates (other
than (i) the Form T-1 or (ii) the financial statements, financial
data and supporting schedules and other financial information
included or incorporated by reference therein, as to which such
counsel need express no opinion) complied as to form in all
material respects with the applicable requirements of the Act and
the Exchange Act and the respective rules thereunder; and nothing
has come to the attention of such counsel that causes such counsel
to believe that on the Effective Date or at the Execution Time the
Company Registration Statement contains or contained any untrue
statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading or
<PAGE> 24
24
that the Company Prospectus as of its date and on the Closing Date
includes any untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading (in each case, other than (i) the Form T-1 or
(ii) the financial statements, financial data and supporting
schedules and other financial information included or incorporated
by reference therein, as to which such counsel need express no
belief);
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the Company is not and, after giving effect to the
offering and sale of the DECS and the application of the proceeds
thereof as described in the Company Prospectus, will not be an
"investment company" as defined in the Investment Company Act of
1940, as amended;
(ix) no consent, approval, authorization, filing with or order
of any court or governmental agency or body is required to be made
or obtained by the Company in connection with the transactions
contemplated herein, except such as have been obtained under the
Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of
the DECS by the Underwriters in the manner contemplated in this
Agreement and in the Company Prospectus and such other approvals
(specified in such opinion) as have been obtained; and
(x) none of the execution of the Indenture, the issuance and
sale of the DECS, the consummation of any other of the transactions
herein contemplated nor the fulfillment of the terms hereof result
in a breach or constitute a default under (i) the charter or
by-laws of the Company, (ii) the terms of any indenture or other
material agreement or obligation known to such counsel to which the
Company or any of its Designated Subsidiaries is a party or bound,
or (iii) any statute, law, rule, regulation, judgment, order or
decree known to such counsel to be applicable to the Company or any
of its Designated Subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the
<PAGE> 25
25
Company or any of its Designated Subsidiaries or any of its or
their properties.
In rendering such opinion, such counsel may limit its opinion to
matters involving the application of the laws the States of Illinois and
New York, the General Corporation Law of the State of Delaware and the
Federal laws of the United States and as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the
Company and public officials. References to the Company Prospectus in
this paragraph (b) include any supplements thereto at the Closing Date.
The opinion of such counsel shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
(c) TLC shall have furnished to the Representatives the opinion of
Hale and Dorr LLP, counsel for TLC, dated the Closing Date, to the
effect that:
(i) TLC has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction
in which it is chartered or organized, with full corporate power
and authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the TLC
Prospectus;
(ii) the TLC Registration Statement has become effective under
the Act; any required filing of the TLC Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); to the
knowledge of such counsel, no stop order suspending the
effectiveness of the TLC Registration Statement has been issued, no
proceedings for that purpose have been instituted or threatened and
the TLC Registration Statement and the TLC Prospectus as of their
respective effective or issuance dates (other than the financial
statements, financial data, proforma data, supporting schedules and
other financial information contained or
<PAGE> 26
26
incorporated by reference therein, as to which such counsel need
express no opinion) complied as to form in all material respects
with the applicable requirements of the Act and the Exchange Act
and the respective rules thereunder;
(iii) the capital stock of TLC conforms in all material
respects to the description thereof contained in the TLC
Prospectus;
(iv) this Agreement has been duly authorized, executed and
delivered by TLC;
(v) TLC is not and, after giving effect to the offering and
sale of the DECS and the Shares, will not be an "investment
company" as defined in the Investment Company Act of 1940, as
amended;
(vi) no consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in
connection with the transactions contemplated herein, except such
as have been obtained under the Act and such as may be required
under the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the DECS by the Underwriters in the
manner contemplated in this Agreement and in the Company Prospectus
and such other approvals (specified in such opinion) as have been
obtained;
(vii) the consummation of any of the transactions herein
contemplated by TLC and the fulfillment of the terms hereof by TLC
will not result in a breach of or constitute a default under (i)
the charter or by-laws of TLC or the TLC Subsidiaries, (ii) the
terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument
<PAGE> 27
27
to which TLC or the TLC Subsidiaries is a party or bound or to
which its or their property is subject and that is filed as an
exhibit to TLC's Annual Report on Form 10-K for the year ended
January 28, 1998, or (iii) any statute, law, rule, regulation,
judgment, order or decree applicable to TLC or the TLC Subsidiaries
of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over TLC or
the TLC Subsidiaries or any of its or their properties; and
(viii) The opinion will also state that nothing has come to
the attention of such counsel that causes it to believe that on the
Effective Date or at the Execution Time the TLC Registration
Statement contains or contained any untrue statement of a material
fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the TLC Prospectus as of its date and on the
Closing Date includes any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading (in each case, other than the
financial statements, financial data, proforma data, supporting
schedules and other financial information contained or incorporated
by reference therein, as to which such counsel need express no
belief); provided, however, that such counsel need express no
opinion with respect to information contained in documents filed by
Broderbund Software Inc. with the Commission which is incorporated
by reference into to TLC Prospectus.
In rendering such opinion, such counsel may rely limit its opinion to
matters involving the application of the laws of the Commonwealth of
Massachusetts, the State of New York, the Federal laws of the United States
and the General Corporation Law of the State of Delaware and (B) as to
matters of fact, to the extent they deem proper, on certificates of
responsible
<PAGE> 28
28
officers of TLC and public officials. References to the Company Prospectus
in this paragraph (c) include any supplements thereto at the Closing Date.
The opinion of such counsel shall be rendered to the Underwriters at the
request of TLC and shall so state therein.
(d) TLC shall have furnished to the Representatives the opinion of Neal
S. Winneg, general counsel for TLC, dated the Closing Date, to the effect
that:
(i) each of TLC and the TLC Subsidiaries has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is
chartered or organized, with full corporate power and authority to
own or lease, as the case may be, and to operate its properties and
conduct its business as described in the TLC Prospectus;
(ii) all the outstanding shares of capital stock of each TLC
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except for non-voting
exchangeable shares of Softkey Software Products, Inc. described in
the TLC Prospectus, and as otherwise set forth in the TLC
Prospectus, to the knowledge of such counsel, all outstanding
shares of capital stock of the TLC Subsidiaries are owned by TLC
either directly or through wholly owned subsidiaries free and clear
of any perfected security interest and, to the knowledge of such
counsel after due inquiry, any other security interest, claim, lien
or encumbrance, other than security interests held by certain
banks;
(iii) TLC's authorized equity capitalization
<PAGE> 29
29
is as set forth in the TLC Prospectus; the outstanding shares of
capital stock of TLC have been duly and validly authorized and
issued and are fully paid and nonassessable; the Shares are duly
listed, and admitted and authorized for trading on the NYSE; and to
the knowledge of such counsel, the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or
other rights to subscribe for the Shares;
(iv) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving
TLC or any subsidiaries of TLC or its or their property of a
character required to be disclosed in the TLC Registration
Statement which is not adequately disclosed in the TLC Prospectus,
and to the knowledge of such counsel; after due inquiry, there is
no franchise, contract or other document of a character required to
be described in the TLC Registration Statement or TLC Prospectus,
or to be filed as an exhibit thereto, which is not described or
filed as required; and the statement included or incorporated in
the TLC Prospectus with respect to any such action, suit,
proceeding, franchise, contract or other document fairly summarize
the matters therein described;
(v) to such counsel's knowledge, there are no persons other
than the Company with registration or other similar rights to have
any securities of TLC registered pursuant to the TLC Registration
Statement.
<PAGE> 30
30
(vi) The opinion will also state that nothing has come to the
attention of such counsel that causes it to believe that on the
Effective Date or at the Execution Time the TLC Registration
Statement contains or contained any untrue statement of a material
fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the TLC Prospectus (including information
contained in documents filed by Broderbund Software Inc. with the
Commission which is incorporated by reference into the TLC
Prospectus) as of its date and on the Closing Date includes any
untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading (in each case, other than the financial statements,
financial data, proforma data, supporting schedules and other
financial information contained or incorporated by reference
therein, as to which such counsel need express no belief).
In rendering such opinion, such counsel may rely limit its opinion to
matters involving the application of the laws of the Commonwealth of
Massachusetts, the Federal laws of the United States and the General
Corporation Law of the State of Delaware and (B) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of TLC
and public officials. References to the Company Prospectus in this paragraph
(d) include any supplements thereto at the Closing Date. The opinion of such
counsel shall be rendered to the Underwriters at the request of TLC and
shall so state therein.
(e) The Representatives shall have received from Mayer, Brown & Platt,
counsel for the Underwriters, such opinion or opinions, dated the Closing
Date and addressed to the Representatives, with respect to the issuance and
sale of the
<PAGE> 31
31
Securities, the Company Registration Statement, the Company Prospectus
(together with any supplement thereto) and other related matters as the
Representatives may reasonably require, and the Company shall have furnished
to such counsel such documents as they request for the purpose of enabling
them to pass upon such matters. The opinion or opinions of such counsel
shall be rendered to the Underwriters at the request of the Company and
shall so state therein.
(f) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President or any Vice President and the principal financial or accounting
officer of the Company, dated the Closing Date, to the effect that the
signers of such certificate have carefully examined the Company Registration
Statement, the Company Prospectus, any supplements to the Company Prospectus
and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as
of the Closing Date with the same effect as if made on the Closing
Date and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Company Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial statements
included in the Company Prospectus as of its issue date, there has
been no material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or
otherwise), earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated in the Company Prospectus.
(g) the DECS are authorized for listing, subject to official notice of
issuance, on the New York Stock Exchange;
<PAGE> 32
32
(h) TLC shall have furnished to the Representatives a certificate of
TLC, signed by the Chairman of the Board or the President and the principal
financial or accounting officer of TLC, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined the TLC
Registration Statement, the TLC Prospectus, any supplements to the TLC
Prospectus and this Agreement and that:
(i) the representations and warranties of TLC in this
Agreement are true and correct in all material respects on and as
of the Closing Date with the same effect as if made on the Closing
Date and TLC has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior
to the Closing Date;
(ii) no stop order suspending the effectiveness of the TLC
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to TLC's knowledge, threatened;
and
(iii) since the date of the most recent financial statements
included in the TLC Prospectus (exclusive of any supplement
thereto), there has been no material adverse change, or any
development involving a prospective material adverse change, in the
condition (financial or otherwise), earnings, business or
properties of TLC and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the TLC
Prospectus (exclusive of any supplement thereto).
(i) At the Execution Time and at the Closing Date,
PricewaterhouseCoopers LLP shall have furnished to the Representatives
letters, dated respectively as of the Execution Time and as of the Closing
Date, in form and substance satisfactory to the Representatives, confirming
that they are independent accountants within the meaning of the Act and the
Exchange Act and the respective applicable published rules and regulations
thereunder and that they have performed a review of the unaudited interim
financial information of the Company for the three-month period ended March
28, 1998, and as at March 28, 1998 in accordance with Statement on
Accounting Standards No. 71, and stating in effect that:
<PAGE> 33
33
(i) in their opinion the audited financial statements and
financial statement schedules and pro forma financial statements
included or incorporated in the Company Registration Statement and
the Company Prospectus and reported on by them comply as to form in
all material respects with the applicable accounting requirements
of the Act and the Exchange Act and the related published rules and
regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; their limited review, in accordance with standards
established under Statement on Auditing Standards No. 71, of the
unaudited interim financial information for the three-month period
ended March 29, 1998, and as at March 29, 1998, as indicated in
their Form 10-Q for the quarter ended March 29, 1998, incorporated
in the Company Registration Statement and the Company Prospectus;
carrying out certain specified procedures (but not an examination
in accordance with generally accepted auditing standards) which
would not necessarily reveal matters of significance with respect
to the comments set forth in such letter; a reading of the minutes
of the meetings of the stockholders and Board of Directors of the
Company and the Subsidiaries; and inquiries of certain officials of
the Company who have responsibility for financial and accounting
matters of the Company and its subsidiaries as to transactions and
events subsequent to December 28, 1997, nothing came to their
attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated in the Company Registration Statement and the
Company Prospectus do not comply as to form in all material
respects with applicable accounting requirements of the Act
and with the published rules and regulations of the
Commission with respect to financial statements included or
incorporated in quarterly reports on Form 10-Q under the
Exchange Act; and said unaudited financial statements are
not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with
that of the audited financial statements included or
incorporated in the Company Registration Statement and the
Company Prospectus;
<PAGE> 34
34
(2) with respect to the period subsequent to March 29,
1998, there were any changes, at a specified date not more
than five days prior to the date of the letter, in the
stock (the sum of common stock and paid-in capital, net of
treasury stock) or long-term debt of the Company and its
consolidated subsidiaries or any decreases in consolidated
total assets, net current assets (working capital) or
stockholders' investment as compared with the amounts shown
on the March 29, 1998 consolidated balance sheet included
or incorporated in the Company Registration Statement and
the Company Prospectus, or for the period from March 29,
1998 to such specified date there were any decreases, as
compared with the corresponding period in the preceding
year in consolidated operating revenues, operating profit,
income before income taxes or in the total or per-share
amounts of net income, except in all instances for changes
or decreases set forth in such letter, in which case the
letter shall be accompanied by an explanation by the
Company as to the significance thereof unless said
explanation is not deemed necessary by the Representatives;
(3) the information included in the Company
Registration Statement and Company Prospectus in response
to Regulation S-K, Item 301 (Selected Financial Data), Item
302 (Supplementary Financial Information), Item 402
(Executive Compensation) and Item 503(d) (Ratio of Earnings
to Fixed Charges) is not in conformity with the applicable
disclosure requirements of Regulation S-K; and
(4) with regard to the Company and its consolidated
subsidiaries, the amounts included in any unaudited
"capsule" information included or incorporated by reference
in the Company Registration Statement or the Company
Prospectus do not agree with the corresponding amounts in
the audited or unaudited consolidated financial statement
from which such amounts were derived or were not determined
on a basis substantially consistent with that of the
corresponding amounts in the audited financial statement
included or incorporated by reference in the Company
Registration Statement and
<PAGE> 35
35
the Company Prospectus;
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth or incorporated by reference in the Company Registration
Statement and the Company Prospectus, including the information
included or incorporated in Items 1, 6 and 7 of the Company's
Annual Report on Form 10-K, incorporated in the Company
Registration Statement and the Company Prospectus, and the
information included in the "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included or
incorporated in any of the Company's Quarterly Reports on Form
10-Q, incorporated in the Company Registration Statement and the
Company Prospectus, agrees with the accounting records of the
Company and its subsidiaries, excluding any questions of legal
interpretation; and
(iv) if unaudited pro forma financial statements are included
or incorporated by reference in the Company Registration Statement
and the Company Prospectus, on the basis of a reading of the
unaudited pro forma financial statements included or incorporated
in the Company Registration Statement and the Company Prospectus
(the "pro forma financial statements"); carrying out certain
specified procedures; inquiries of certain officials of the Company
and the acquired company who have responsibility for financial and
accounting matters; and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts
in the pro forma financial statements, nothing came to their
attention which caused them to believe that the pro forma financial
statements do not comply as to form in all material respects with
the applicable accounting requirements of Rule 11-02 of Regulation
S-X or that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of such
statements.
<PAGE> 36
36
References to the Company Prospectus in this paragraph (i) include
any supplement thereto at the date of the letter.
(j) At the Execution Time and at the Closing Date,
PricewaterhouseCoopers LLP shall have furnished to the Representatives
letters, dated respectively as of the Execution Time and as of the Closing
Date, in form and substance satisfactory to the Representatives, confirming
that they are independent accountants within the meaning of the Act and the
Exchange Act and the respective applicable published rules and regulations
thereunder and that they have performed a review of the unaudited interim
financial information of TLC for the three-month period ended April 4, 1998,
and as at April 4, 1998 in accordance with Statement on Accounting Standards
No. 71, and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules and pro forma financial statements
included or incorporated in the TLC Registration Statement and the
TLC Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and
regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by TLC and its subsidiaries;
their limited review, in accordance with standards established
under Statement on Auditing Standards No. 71, of the unaudited
interim financial information for the three-month period ended
April 4, 1998, and as at April 4, 1998, as indicated in their
report dated May 12, 1998, incorporated in the TLC Registration
Statement and the TLC Prospectus; carrying out certain specified
procedures (but not an examination in accordance with generally
accepted auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set forth in
such letter; a reading of the minutes of the meetings of the
stockholders, directors and committees of TLC and the TLC
Subsidiaries; and inquiries of certain officials of TLC who have
responsibility for financial and accounting matters of TLC and its
subsidiaries as to transactions and events subsequent to January 3,
1998, nothing came to their attention which caused them to believe
that:
<PAGE> 37
37
(1) any unaudited financial statements included or
incorporated in the TLC Registration Statement and the TLC
Prospectus do not comply as to form in all material respects
with applicable accounting requirements of the Act and with
the published rules and regulations of the Commission with
respect to financial statements included or incorporated in
quarterly reports on Form 10-Q under the Exchange Act; and
said unaudited financial statements are not in conformity
with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited
financial statements included or incorporated in the TLC
Registration Statement and the TLC Prospectus;
(2) with respect to the period subsequent to April 4,
1998, there were any changes, at a specified date not more
than five days prior to the date of the letter, in
consolidated net sales or increase in total or per-share
amounts of loss before extraordinary items of net loss as
compared with the amounts shown on the April 4, 1998
consolidated balance sheet included or incorporated in the
TLC Registration Statement and the TLC Prospectus, except in
all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by TLC as to the significance thereof unless
said explanation is not deemed necessary by the
Representatives;
(3) the information included in the TLC Registration
Statement and TLC Prospectus in response to Regulation S-K,
Item 301 (Selected Financial Data), Item 302 (Supplementary
Financial Information), Item 402 (Executive Compensation)
and Item 503(d) (Ratio of Earnings to Fixed Charges) is not
in conformity with the applicable disclosure requirements of
Regulation S-K; and
(4) with regard to the TLC and its consolidated
subsidiaries, the amounts included in any unaudited
"capsule" information included or incorporated by reference
in the TLC Registration Statement or the TLC Prospectus do
not agree with the corresponding amounts in the audited or
<PAGE> 38
38
unaudited consolidated financial statement from which such amounts
were derived or were not determined on a basis substantially
consistent with that of the corresponding amounts in the audited
financial statement included or incorporated by reference in the
TLC Registration Statement and the TLC Prospectus;
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of TLC and its subsidiaries) set forth
in the TLC Registration Statement and the TLC Prospectus, including
the information the information included or incorporated in TLC's
Annual Report on Form 10-K, incorporated in the TLC Registration
Statement and the TLC Prospectus, and the information included in
the "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included or incorporated in the
Company's Quarterly Reports on Form 10-Q, incorporated in the TLC
Registration Statement and the TLC Prospectus, agrees with the
accounting records of TLC and its subsidiaries, excluding any
questions of legal interpretation; and
(iv) on the basis of a reading of the unaudited pro forma
financial statements included or incorporated in the TLC
Registration Statement and the TLC Prospectus (the "TLC pro forma
financial statements"); carrying out certain specified procedures;
inquiries of certain officials of TLC who have responsibility for
financial and accounting matters; and proving the arithmetic
accuracy of the application of the pro forma adjustments to the
historical amounts in the TLC pro forma financial statements,
nothing came to their attention which caused them to believe that
the TLC pro forma financial statements do not comply as to form in
all material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma adjustments
have not been properly applied to the historical amounts in the
compilation of such statements.
References to the TLC Prospectus in this paragraph (j)
include any supplement thereto at the date of the letter.
<PAGE> 39
39
(k) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in each of the Company Prospectus and the TLC
Prospectus (exclusive of any supplement thereto), there shall not have been
(i) any change or decrease specified in the letter or letters referred to in
paragraphs (h) or (i) of this Section 8 or (ii) any change, or any
development involving a prospective change, in or affecting the condition
(financial or otherwise), earnings, business or properties of the Company or
TLC and their respective subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Company Prospectus or the TLC Prospectus
(exclusive of any supplement thereto) the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the DECS as
contemplated by the Company Prospectus or the TLC Prospectus (in either
case, exclusive of any amendment thereof).
(l) At the Execution Time and at the Closing Date, Ernst & Young LLP
and KPMG Peat Marwick LLP shall have furnished to the Representatives
letters, dated respectively as of the Execution Time and as of the Closing
Date, in form and substance satisfactory to the Representatives, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information pertaining to Broderbund Software, Inc.
contained in or incorporated by reference into the TLC Registration
Statement.
(m) At the Execution Time, PricewaterhouseCoopers LLP shall have
furnished to the Representatives letters, dated respectively as of the
Execution Time and as of the Closing Date, in form and substance
satisfactory to the Representatives, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information pertaining to Mindscape Group contained in or incorporated by
reference into the TLC Registration Statement.
(n) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally
<PAGE> 40
40
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Act) or any notice given of any intended or potential
decrease in any such rating or of a possible change in any such rating that
does not indicate the direction of the possible change.
(o) Prior to the Closing Date, the Company and TLC shall have furnished
to the Representatives such further information, certificates and documents
as the Representatives may reasonably request.
If any of the conditions specified in this Section 8 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 8 shall be
delivered at the office of Mayer, Brown & Platt, counsel for the Underwriters,
at 190 South LaSalle Street, Chicago, Illinois 60603 on the Closing Date.
9. Reimbursement of Underwriters' Expenses. If the sale of the DECS
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 8 hereof is not satisfied or because of
any refusal, inability or failure on the part of the Company or TLC to perform
any agreement herein or comply with any provision hereof other than by reason of
a default by any of the Underwriters, subject to the immediately following
sentence, the Company will reimburse the Underwriters severally through Salomon
Smith Barney on demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been reasonably incurred by them
in connection with the proposed purchase and sale of the DECS. If the Company is
required to make any payment to the Underwriters under this Section 9 because of
TLC's refusal, inability or failure to satisfy any condition to the obligations
of the Underwriters set forth in Section 8, TLC shall, rather than the Company,
reimburse
<PAGE> 41
41
the Underwriters on demand for the foregoing expenses.
10. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the DECS as originally filed or in any amendment thereof, or in any Company
Preliminary Prospectus or the Company Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for use in connection with the preparation thereof, or arises out
of or is based upon the Statement of Eligibility (Form T-1) under the Trust
Indenture Act of the Trustee, and such indemnity with respect to any Company
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or any
director, officer, employee or agent of, or any person controlling such
Underwriter) from whom the person asserting any such loss, claim, damage or
liability purchased the DECS which are the subject thereof if such person did
not receive a copy of the Company Prospectus (or the Company Prospectus as
amended or supplemented) excluding documents incorporated therein by reference
at or prior to the confirmation of the sale of such DECS to such person in any
case where such delivery is required by the Act and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in any Company
<PAGE> 42
42
Preliminary Prospectus was corrected in the Company Prospectus (or the Company
Prospectus as amended or supplemented) and; provided, further, that the Company
will not be liable under the indemnity agreement in this paragraph (a) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in the Company Registration Statement as originally filed
or in any amendment thereof, or in any Company Preliminary Prospectus or the
Company Prospectus, or in any amendment thereof or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by TLC specifically for inclusion therein. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) TLC agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person
who controls any Underwriter within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in (i) the TLC
Registration Statement for the registration of the Shares as originally filed or
in any amendment thereof, or in any TLC Preliminary Prospectus or the TLC
Prospectus, or in any amendment thereof or supplement thereto, or (ii) the
Company Registration Statement as originally filed to register the DECS or in
any amendment thereof, or in any Company Preliminary Prospectus or the Company
Prospectus, or in any amendment thereto or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state in the documents
referred to in clause (i) or (ii) above a material fact required to be stated
therein or necessary to make the statements therein not misleading, but in the
case of the documents referred to in clause (ii) only to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished in
writing to the Company by TLC specifically for inclusion therein including the
information contained in the Preliminary TLC Prospectus or TLC Prospectus (other
than information contained in or omitted from any such Preliminary TLC
Prospectus or TLC Prospectus in reliance on and in
<PAGE> 43
43
conformity with information furnished to TLC by the Company specifically for
inclusion therein) and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that TLC will not be liable under
the indemnity agreement in this paragraph (b) to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made in the documents referred to in clause (i) above in reliance upon and
in conformity with written information furnished to TLC by or on behalf of
any Underwriter through the Representatives specifically for use in
connection with the preparation thereof, and such indemnity with respect to
any TLC Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or any director, officer, employee or agent or, or any person
controlling such Underwriter) from whom the person asserting any such loss,
claim, damage or liability purchased the DECS if such person did not receive
a copy of the TLC Prospectus (or the TLC Prospectus as amended or
supplemented) excluding documents incorporated therein by reference at or
prior to the confirmation of the sale of such DECS to such person in any
case where such delivery is required by the Act and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in any TLC Preliminary Prospectus was corrected in the TLC
Prospectus (or the TLC Prospectus as amended or supplemented); and provided,
further, that TLC shall not be liable under the indemnity agreement in this
paragraph (b) to the extent that any such loss, claim, damage or liability
arises out of or is based on any such untrue statement or alleged untrue
statement or omission or alleged omission made in the documents referred to
in clause (i) above in reliance upon and in conformity with written
information furnished to TLC by the Company specifically for inclusion
therein. This indemnity agreement will be in addition to any liability which
TLC may otherwise have.
(c) The Company agrees to indemnify and hold harmless TLC, the
directors, officers, employees and agents of TLC and each person who
controls TLC within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims,
<PAGE> 44
44
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in the Company Preliminary Prospectus or the Company
Prospectus, or in any amendment thereof or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of TLC specifically for use in
connection with the preparation thereof. TLC agrees that it has provided to
the Company for use in the Company Preliminary Prospectus and the Company
Prospectus information under the following captions therein: "THE LEARNING
COMPANY, INC.," "RELATIONSHIP BETWEEN TRIBUNE AND THE LEARNING COMPANY" and
"PRICE RANGE OF LEARNING COMMON STOCK."
(d) Each Underwriter agrees to indemnify and hold harmless the Company,
each of its directors, officers, employees and agents, and each person who
controls the Company within the meaning of either the Act or the Exchange
Act, to the same extent as the foregoing indemnity in paragraph (a) from the
Company to each Underwriter, but only with reference to written information
relating to such Underwriter furnished to the Company by or on behalf of
such Underwriter through the Representatives specifically for inclusion in
the documents referred to in such indemnity. This indemnity agreement will
be in addition to any liability which any Underwriter may otherwise have.
(e) Each Underwriter agrees to indemnify and hold harmless TLC, each of
its directors, officers, employees and agents and each person who controls
TLC within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity in paragraph (b) from TLC to each
Underwriter, but only with reference to written information relating to such
Underwriter furnished to TLC
<PAGE> 45
45
by or on behalf of such Underwriter through the Representatives specifically
for inclusion in the documents referred to in such indemnity. This indemnity
agreement will be in addition to any liability which any Underwriter may
otherwise have.
(f) Promptly after receipt by an indemnified party under this Section
10 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 10, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under this Section 10 except to the extent the
indemnifying party has been materially prejudiced by the failure to be so
notified. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the
extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party; provided, however, that if the defendants in any
such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate
counsel to assert such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of
its election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed
separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (other than local counsel used
principally to facilitate local litigation), approved by the Representatives
in the case of paragraphs (a) or (b) of this Section 10, representing the
indemnified parties under such paragraphs (a) or (b) who are parties to such
action), (ii) the
<PAGE> 46
46
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party; and except that, if clause (i) or
(iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii). The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment
(after all rights to appeal have been exhausted) for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified
party for reasonable fees and expenses of counsel required to be paid by
this Section 10(f), the indemnifying party agrees that it shall be liable
for any settlement of any proceeding effected without its written consent if
(i) such settlement is entered into more than 90 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such
aforesaid request prior to the date of such settlement. No indemnifying
party shall, without the prior written consent of the indemnified party
(which consent shall not be unreasonably withheld), effect any settlement of
any pending or threatened proceeding in respect of which any indemnified
party is a party unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject
matter of such proceeding.
(g) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraphs (a),
(b), (c), (d) or (e) of this Section 10 is unavailable to or insufficient to
hold harmless an indemnified party for any reason, each indemnifying party
agrees to contributed to the aggregate losses, claims, damages and
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) to which an indemnified party may be
subject in such proportion so that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount bears
to the sum of such discount and the purchase price of the DECS specified in
Schedule I hereto and the Company and TLC are responsible for the balance
according to the
<PAGE> 47
47
relative benefits received by the Company and TLC, in the aggregate, from
the offering of the DECS; provided, however, that (y) in no case shall any
Underwriter be responsible for any amount in excess of the underwriting
discount applicable to the DECS purchased by such Underwriter hereunder and
(z) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 10, each person who controls an Underwriter within the meaning
of the Act shall have the same rights to contribution as such Underwriter,
and each person who controls the Company or TLC within the meaning of the
Act or the Exchange Act, each officer of the Company or TLC who shall have
signed the Company Registration Statement or the TLC Registration Statement
and each director of the Company or TLC shall have the same rights to
contributions as the Company or TLC, as the case may be, subject in each
case to clause (y) of this paragraph (g). Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit
or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
paragraph (g), notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have hereunder or otherwise than under this
paragraph (g).
(h) The Company and TLC agree that the provisions of Section 6
(relating to indemnification and contribution) of the Securities Resale
Registration Rights Agreement dated as of December 22, 1995 by and among the
Company and TLC (formerly SoftKey International Inc.) (the "Registration
Rights Agreement") shall be applicable to the offering of the DECS. Each
reference in Section 6 of the Registration Rights Agreement to "Registration
Statement" shall be deemed to include the TLC Registration Statement, and
each reference to "Prospectus" in such Section 6 shall be deemed to include
(i) the TLC Preliminary Prospectus, (ii) the TLC Prospectus and (iii) the
statement contained in the Company Preliminary Prospectus and Company
Prospectus under the captions "SUMMARY -- The Learning Company, Inc.," "THE
LEARNING COMPANY, INC." and "PRICE RANGE OF LEARNING COMMON STOCK."
11. Termination. This Agreement shall be subject to termination in
<PAGE> 48
48
the absolute discretion of the Representatives, by notice given to the
Company and TLC prior to delivery of and payment for the DECS, if at any
time prior to such time (i) trading in the Company's or TLC's common stock
shall have been suspended by the Commission or the NYSE or trading in
securities generally on the NYSE shall have been suspended or limited or
minimum prices shall have been established on such Exchange, (ii) a banking
moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war
or other calamity or crisis the effect of which on financial markets is such
as to make it in the case of (i), (ii) or (iii), in the judgment of the
Representatives, impractical or inadvisable to proceed with the offering or
delivery of the DECS as contemplated by the Company Prospectus (exclusive of
any supplement thereto).
12. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
the Company and TLC or their respective officers and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any
Underwriter, the Company or TLC or any of the officers, directors or
controlling persons referred to in Section 10 hereof, and will survive
delivery of and payment for the DECS. The provisions of Sections 9 and 10
hereof shall survive the termination or cancellation of this Agreement.
13. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to the Salomon Smith Barney General Counsel
(fax no.: (212) 816-7912 and confirmed to the General Counsel, Salomon Smith
Barney Inc., at 388 Greenwich Street, New York, New York, 10013, Attention:
General Counsel; if sent to the Company, will be mailed, delivered or
telefaxed to Crane H. Kenney, General Counsel of the Company (fax no.: (312)
222-4206) and confirmed to it at 435 North Michigan Avenue, Chicago,
Illinois, 60611, attention of the Legal Department or, if sent to TLC, will
be mailed, delivered or telefaxed to Neal S. Winneg, General Counsel of TLC
(fax no.: (617) 494-5660) and confirmed to it at One Athenaeum Street,
Cambridge, Massachusetts 02142, attention of the Legal Department.
14. Successors. This Agreement will inure to the benefit of and be
<PAGE> 49
49
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 10
hereof, and no other person will have any right or obligation hereunder.
15. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York.
16. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
17. Headings. The section headings used herein are for convenience only
and shall not affect the construction hereof.
18. Definitions. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Company
Registration Statement, any post-effective amendment or amendments thereto and
any Rule 462(b) Company Registration Statement became or become effective under
the Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
<PAGE> 50
50
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Company Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) above.
"Company Prospectus" shall mean the prospectus relating to the DECS that
is first filed pursuant to Rule 424(b) after the Execution Time or.
"Company Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Company
Registration Statement becomes effective prior to the Closing Date, shall also
mean such registration statement as so amended or such Rule 462(b) Company
Registration Statement, as the case may be. Such term shall include any Rule
430A Information deemed to be included therein at the Effective Date as provided
by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the Act.
"Rule 430A Information" shall mean information with respect to the DECS
and the Shares and the offering thereof permitted to be omitted from the Company
Registration Statement and the TLC Registration Statement when each becomes
effective pursuant to Rule 430A.
"Rule 462(b) Company Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating to
the offering covered by the initial Company Registration Statement.
"Rule 462(b) TLC Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating to
the offering covered by the initial TLC Registration Statement.
"Salomon Smith Barney" shall mean Smith Barney Inc. or Salomon Brothers
Inc, to the extent that either such party is a signatory to this Agreement.
<PAGE> 51
51
"TLC Effective Date" shall mean each date and time that the TLC
Registration Statement, any post-effective amendment or amendments thereto and
any Rule 462(b) TLC Registration Statement became or become effective.
"TLC Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 2(a) above and any preliminary prospectus included in
the TLC Registration Statement at the Effective Date that omits Rule 430A
Information.
"TLC Prospectus" shall mean the prospectus relating to the Shares that is
first filed pursuant to Rule 424(b) after the Execution Time or, if no filing
pursuant to Rule 424(b) is required, shall mean the form of final prospectus
relating to the Shares included in the TLC Registration Statement at the
Effective Date.
"TLC Registration Statement" shall mean the registration statement
referred to in paragraph 2(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) TLC Registration
Statement becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b) TLC Registration
Statement, as the case may be. Such term shall include any Rule 430A Information
deemed to be included therein at the Effective Date as provided by Rule 430A.
<PAGE> 52
52
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
Tribune Company
By: /s/ David J. Granat
--------------------------------
Name:
Title:
The Learning Company, Inc.
By: /s/ Scott Murray
--------------------------------
Name: Scott Murray
Title: Executive Vice President
and Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
Smith Barney Inc.
By: /s/ Michael S. Canmann
---------------------------
Name: Michael S. Canmann
Title: Vice President
For itself and the other several
Underwriters named in
Schedule I to the foregoing Agreement.
<PAGE> 53
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF UNDERWRITTEN
UNDERWRITERS SECURITIES TO BE PURCHASED
---------------------------------------
<S> <C>
Smith Barney Inc. ............................................4,600,000
----------
Total ........................................................4,600,000
==========
</TABLE>
<PAGE> 54
Exhibit A
TLC Multimedia Inc.
Learning Company Properties Inc.
The Learning Company Funding, Inc.
Mindscape, Inc.
