Attached files
| file | filename |
|---|---|
| EX-10.4 - EX.10.4 - SERVICE AGREEMENT (BOOLEY) - Archipelago Learning, Inc. | mm06-1010_8ke104.htm |
| EX-10.3 - EX.10.3 - SERVICE AGREEMENT (DRAKARD) - Archipelago Learning, Inc. | mm06-1010_8ke103.htm |
| EX-10.2 - EX.10.2 - AMEND. NO.7 TO CREDIT AGREEMENT - Archipelago Learning, Inc. | mm06-1010_8ke102.htm |
| EX-10.1 - EX.10.1 - SHARE PURCHASE AGREEMENT - Archipelago Learning, Inc. | mm06-1010_8ke101.htm |
| EX-4.1 - EX.4.1 - REGISTRATION RIGHT AGREEMENT - Archipelago Learning, Inc. | mm06-1010_8ke041.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
[Missing Graphic Reference]
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): June 9,
2010
________________________
ARCHIPELAGO
LEARNING, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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001–34555
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27-0767387
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(State
or other jurisdiction of
incorporation)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
Number)
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3400
Carlisle St., Suite 345
Dallas,
Texas
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75204
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(Address
of principal executive offices)
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(Zip
Code)
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(Registrant’s telephone number,
including area code): (800) 419-3191
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01. Entry
into a Material Definitive Agreement.
Acquisition
Agreement
On June 9, 2010, Archipelago Learning,
Inc., a Delaware corporation (the “Company”) and Archipelago Learning Holdings
UK Limited, a United Kingdom private limited company (“Archipelago UK”), a newly
formed wholly owned indirect subsidiary of the Company, acquired Educationcity,
Ltd., a United Kingdom private limited company (“EducationCity”) pursuant to a
Share Purchase Agreement (the “Acquisition Agreement”) with Matthew
Drakard, Simon Booley and Tom Morgan (collectively, the
“Sellers”). Pursuant to the Acquisition Agreement, the Sellers agreed
to sell and Archipelago UK agreed to purchase 100% of the equity of
EducationCity for a purchase price of: (i) $65,116,274 in cash; (ii) 1,242,408
shares of common stock, par value $0.001 (the “common stock”), of the Company;
and (iii) $5,000,000 in additional deferred cash consideration, of which
$2,500,000 will be paid by the Company on each of December 31, 2010 and December
31, 2011 (the “Acquisition”). The purchase price is subject to a
post-closing working capital adjustment. Archipelago UK’s obligations
under the Acquisition Agreement are guaranteed by the Company. In
addition, the Acquisition was financed with cash on hand and the proceeds of a
new $15,000,000 supplemental term loan and $10,000,000 revolving loan
commitments described below.
The Acquisition Agreement contains
customary representations, warranties and covenants. Each party has
agreed to indemnify the other party for losses arising from breaches of such
representations, warranties and covenants, subject to certain
limitations. At the closing of the Acquisition, Archipelago UK paid
$6,250,000 into an escrow account (the “escrow amount”) to secure the Sellers’
indemnification obligations. Subject to any indemnification claims,
50% of the escrow amount will be released on the twelve-month anniversary of the
closing of the Acquisition and 50% of the escrow amount will be released on the
eighteen-month anniversary of the closing of the
Acquisition. Pursuant to the Acquisition Agreement, the Sellers have
agreed not to compete with the Company or its subsidiaries for a period of 5
years following closing.
The foregoing description of the
Acquisition Agreement and the transactions contemplated thereby is only a
summary and is qualified in its entirety by the full text of the Acquisition
Agreement, which is attached as Exhibit 10.1 hereto and incorporated herein by
reference. The Board of Directors of the Company (the “Board”)
unanimously approved the Acquisition Agreement.
The Acquisition Agreement has been
included to provide investors and security holders with information regarding
its terms. It is not intended to provide any other factual information about the
Company, Archipelago UK or EducationCity. The representations, warranties, and
covenants contained in the Acquisition Agreement were made only for purposes of
the Acquisition Agreement and as of specified dates, were solely for the benefit
of the parties to the Acquisition Agreement, and are subject to limitations
agreed upon by the parties to the Acquisition Agreement, including
being
2
qualified
by confidential disclosures exchanged between the parties in connection with the
execution of the Acquisition Agreement. The representations and warranties in
the Acquisition Agreement have been made for the purposes of allocating
contractual risk between the parties to the Acquisition Agreement instead of
establishing these matters as facts, and may be subject to standards of
materiality applicable to the parties to the Acquisition Agreement that differ
from those applicable to investors. Investors are not third-party beneficiaries
under the Agreement and should not rely on the representations, warranties, or
covenants or any descriptions thereof as characterizations of the actual state
of facts or the actual condition of the Company, Archipelago UK or EducationCity
or any of their respective subsidiaries or affiliates.
There is
no material relationship between the Company and the Sellers other than in
respect of the Acquisition Agreement and the transactions contemplated thereby
and as otherwise described herein.
Credit
Agreement Amendment
In connection with the Acquisition, the
Company’s wholly owned indirect subsidiary, Archipelago Learning, LLC (the
“Borrower”), entered into Amendment No. 7 to Credit Agreement (the “Credit
Agreement Amendment”), dated as of June 9, 2010, by and among the Borrower, the
other credit parties party thereto, the lenders party thereto and General
Electric Capital Corporation, as agent, to the Borrower’s existing Credit
Agreement, dated as of November 16, 2007 (as amended, the “Credit
Agreement”).
Pursuant to the Credit Agreement
Amendment, certain lenders agreed to provide the Borrower with a supplemental
term loan in an aggregate principal amount of $15,000,000 and supplemental
revolving loan commitments in an amount equal to $10,000,000, proceeds of which
will be used to finance in part the Acquisition. The outstanding
principal amounts under such supplemental term loan and supplemental revolving
loan will bear interest based on a pricing grid (LIBOR plus 3.75% as of the
closing date of the Acquisition), and the interest rate applicable to the
Borrower’s existing term loans and revolving loans are increased to equal such
rates.
The Credit Agreement Amendment also
increased the sublimit for letters of credit to $2,000,000 and permitted
additional incremental term loans in an amount not to exceed
$25,000,000.
The foregoing description of the Credit
Agreement Amendment does not purport to be complete and is qualified in its
entirety by the Credit Agreement Amendment filed as Exhibit 10.2 hereto and
incorporated herein by reference. The Board unanimously approved the
Credit Agreement Amendment.
Item
2.01. Completion
of Acquisition or Disposition of Assets.
3
The
information set forth in Item 1.01 of this report is hereby incorporated by
reference.
Item
2.03. Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
The information set forth in Item 1.01
of this report is hereby incorporated by reference.
Item
3.02. Unregistered
Sales of Equity Securities.
On June 9, 2010, in connection with the
Acquisition and pursuant to the terms of the Acquisition Agreement, the Company
issued 1,242,408 shares of common stock of the Company to the Sellers in a
private placement pursuant to Section 4(2) of the Securities Act and
Regulation D promulgated thereunder. No underwriters were
involved with the issuance of such common stock.
The information set forth in Item 1.01
of this report is hereby incorporated by reference.
Item
3.03. Material
Modification to Rights of Security Holders.
In connection with the Acquisition
Agreement and the Acquisition, the Company entered into a Registration Rights
Agreement dated as of June 9, 2010, by and among the Company and the Sellers
(the “Registration Rights Agreement”), pursuant to which the Company granted the
Sellers piggyback registration rights with respect to the unregistered shares of
common stock of the Company received by the Sellers in the
Acquisition. The information set forth in Item 1.01 of this report is
hereby incorporated by reference.
The foregoing description of the
Registration Rights Agreement and the transactions contemplated thereby is only
a summary, does not purport to be complete, and is qualified in its entirety by
the full text of the Agreement, which is attached as Exhibit 4.1 hereto and
incorporated herein by reference. The Board unanimously approved the
Registration Rights Agreement.
Item
5.02 Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
On June 9, 2010, Matthew Drakard and
Simon Booley were each named Founders of EducationCity in connection
with the Acquisition and are considered executive officers of the
Company.
4
Matthew
Drakard. Mr. Drakard is 39 years old. Mr. Drakard
co-founded EducationCity in August 2003 and was a Director of EducationCity from
such time until the closing of the Acquisition. Prior to founding
EducationCity, Mr. Drakard co-founded Cybermind UK Ltd., a virtual reality
hardware and software company. Mr. Drakard received his B.A. Honors
in Business Studies from Middlesex University. Upon the closing of
the Acquisition, Mr. Drakard was appointed a Founder of
EducationCity.
Simon Booley. Mr.
Booley is 46 years old. Mr. Booley co-founded EducationCity in August
2003 and was a Director of EducationCity from such time until the closing of the
Acquisition. Prior to founding EducationCity, Mr. Booley co-founded
Cybermind UK Ltd., a virtual reality hardware and software
company. Mr. Booley received his D.M.S. in Management Studies from
DeMontfort University. Upon the closing of the Acquisition, Mr.
Booley was appointed a Founder of EducationCity.
Each of Messrs. Drakard and Booley are
party to the Acquisition Agreement described in Item 1.01 of this report and
incorporated by reference herein.
Mr. Drakard is party to a Service
Agreement by and between himself and EducationCity dated as of June 9, 2010 (the
“Drakard Service Agreement”) pursuant to which he is employed by EducationCity
as a Founder and receives an annual base salary of £135,000 (subject to annual
adjustment by the Board) with annual bonus potential of between 40% to 50% of
such base salary, based on performance targets. Mr. Drakard is
entitled to participate in all welfare benefit plans and programs generally
available to other senior executives of the Company and is eligible to receive
stock options in the Company. Except in the event of a termination
for cause, Mr. Drakard is entitled to 12 months prior notice of any
termination. If Mr. Drakard resigns his employment for good reason,
he is entitled to receive his base salary for 12 months without any obligation
to serve during such period and a pro-rated bonus for the year of his
resignation. Mr. Drakard is subject to non-competition and
non-solicitation provisions for 12 months after any termination of his
employment with EducationCity.
Mr. Booley is party to a Service
Agreement by and between himself and EducationCity dated as of June 9, 2010 (the
“Booley Service Agreement” and, together with the Drakard Service Agreement, the
“Service Agreements”) pursuant to which he is employed by EducationCity as a
Founder and receives an annual base salary of £135,000 (subject to annual
adjustment by the Board) with annual bonus potential of between 40% to 50% of
such base salary, based on performance targets. Mr. Booley is
entitled to participate in all welfare benefit plans and programs generally
available to other senior executives of the Company and is eligible to receive
stock options in the Company. Except in the event of a termination
for cause, Mr. Booley is entitled to 12 months prior notice of any
termination. If Mr. Booley resigns his employment for good reason, he
is entitled to receive his base salary for 12 months without any obligation to
serve during such period and a pro-rated bonus for the year of his
resignation. Mr. Booley is subject
5
to
non-competition and non-solicitation provisions for 12 months after any
termination of his employment with EducationCity.
The foregoing description of the
Service Agreements does not purport to be complete and is qualified in its
entirety by the Drakard Service Agreement as filed as Exhibit 10.3 and the
Booley Service Agreement as filed as Exhibit 10.4 hereto and incorporated herein
by reference. The Board unanimously approved the Service
Agreements.
6
Item
9.01. Financial Statements and Exhibits
(d)
Exhibits.
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Exhibit
No.
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Description
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4.1
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Registration
Rights Agreement, dated as of June 9, 2010, by and among Archipelago
Learning, Inc., Matt Drakard, Simon Booley and Tom
Morgan.
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10.1
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Share
Purchase Agreement, dated as of June 9, 2010, by and among Archipelago
Learning, Inc., Archipelago Learning Holdings UK Limited, Matt Drakard,
Simon Booley and Tom Morgan.
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10.2
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Amendment
No. 7 to Credit Agreement, dated as of June 9, 2010, by and among
Archipelago Learning, LLC, the other credit parties party thereto, the
lenders party thereto and General Electric Capital Corporation, as
agent.
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10.3
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Service
Agreement, dated as of June 9, 2010, by and between Matthew Drakard and
Educationcity Limited
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10.4
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Service
Agreement, dated as of June 9, 2010, by and between Simon Booley and
Educationcity Limited
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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.
| Dated: June 10, 2010 | ARCHIPELAGO LEARNING, INC. | |
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By:
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/s/ Tim
McEwen
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Name:
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Tim
McEwen
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Title:
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Chief
Executive Officer
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