This STOCK PURCHASE AGREEMENT, dated as of December 31, 1997
(the "Agreement"), is between INDIVIDUAL INVESTOR GROUP, INC., a Delaware
corporation (the "Company"), and WISE PARTNERS, L.P., a Limited Partnership
organized and existing under the laws of the State of Delaware (the "Buyer").
1. PURCHASE AND SALE. Subject to the terms and conditions
herein set forth, the Company hereby sells and delivers to Buyer and Buyer
hereby purchases from the Company, for an aggregate purchase price of Three
Million Dollars ($3,000,000), an aggregate of Four Hundred Eighty-Nine Thousand
Seven Hundred Ninety-Five (489,795) shares (the "Shares") of the Company's
common stock, $.01 par value per share (the "Common Stock"). The Company will
deliver to Buyer, within Thirty (30) days of the effective date of this
Agreement, stock certificates representing the Shares indicating the Buyer as
the sole owner of the Shares. The Buyer hereby makes payment to the Company, by
delivery of a bank check or certified check payable to the order of the Company
or by wire transfer to an account designated by the Company, in the amount of
Three Million Dollars ($3,000,000).
2. REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company
hereby represents and warrants to and covenants with Buyer as follows:
2.1 Organization. The Company is duly organized, validly
existing and in good standing in the State of Delaware.
2.2 Authority; Execution and Delivery, Etc. The execution,
delivery, and performance of this Agreement has been duly authorized by the
Company's Board of Directors and no other corporate proceedings on the part of
the Company or its stockholders are required. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid, and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights in
general or general principles of equity. The Shares have been duly authorized
and are legally and validly issued, fully paid and non-assessable. The Company
hereby conveys marketable title to the Shares to the Buyer, free and clear of
all liens and encumbrances.
3. REPRESENTATIONS OF BUYER. Buyer hereby represents and
warrants to the Company as follows:
(a) Buyer is a Limited Partnership organized and
existing in good standing under the laws of the State of Delaware and Xxxxxxxx
Xxxxxxxxx, an individual residing in the State of New York, is the sole General
Partner of Buyer.
(b) Buyer is aware that its investment involves
a substantial degree of risk, including, but not limited to the following: (i)
the Company has had substantial operating losses for the fiscal years ended
December 31, 1996 and December 31, 1997, and expects to continue to incur losses
in the future; (ii) the Company has experienced and will continue to experience
substantial fluctuations in its operating income (loss) from quarter to quarter
and year to year; (iii) the Company may need additional financing in the future
to fund operating losses; (iv) management and the existing principal
stockholders of the Company beneficially own a substantial amount of the
outstanding voting stock of the Company and accordingly are in a position to
substantially influence the election of all directors of the Company and the
vote on matters requiring stockholder approval; (v) the Company's success will
to a significant extent rely upon the continued services and abilities of
Xxxxxxxx Xxxxxxxxx, who is the Chairman and Chief
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Executive Officer of the Company. Buyer acknowledge and is aware that there is
no assurance as to the future performance of the Company.
(c) Buyer is purchasing the Shares for his own
account for investment and not with a view to or in connection with a
distribution of the Shares, nor with any present intention of selling or
otherwise disposing of all or any part of the Shares, except as contemplated in
Section 5.1 below. Subject to Section 5.1 below, Buyer agrees that Buyer must
bear the economic risk of its investment because, among other reasons, the
Shares have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), or under the securities laws of any state and,
therefore, cannot be resold, pledged, assigned, or otherwise disposed of until
they are registered under the Securities Act and under applicable securities
laws of certain states or an exemption from such registration is available.
Promptly upon Buyer's request, after the expiration of the two-year holding
period provided for in the SEC's Rule 144(k), provided that Buyer is not then
and for three months prior thereto has not been, an affiliate of the Company
within the meaning of the SEC's Rule 144(a), the Company will exchange the
Buyer's stock certificate (legended as aforesaid) for a new certificate with no
restrictive legends thereon, suitable for transfer in the public securities
markets, subject to the Buyer's providing the Company with such usual and
customary representations in connection therewith as the Company may reasonably
request.
(d) Buyer has the financial ability to bear the
economic risk of its investment in the Company (including its complete loss),
has adequate means for providing for its current needs and personal
contingencies and has no need for liquidity with respect to its investment in
the Company.
(e) Buyer has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Company and Buyer has obtained, in its judgment,
sufficient information from the Company to evaluate the merits and risks of an
investment in the Company. Buyer has had full opportunity to ask questions and
receive satisfactory answers concerning all matters pertaining to its investment
and all such questions have been answered to its full satisfaction. Buyer has
been provided an opportunity to obtain any additional information concerning the
Company and all other information to the extent the Company possesses such
information or can acquire it without unreasonable effort or expense. Buyer has
received no representation or warranty from the Company with respect to its
investment in the Company, and has relied solely upon its own investigation in
making a decision to invest in the Company.
(f) Buyer is an "accredited investor" as defined
in Section 2(15) of the Securities Act and in Rule 501 promulgated thereunder.
(g) This Agreement has been duly executed and
delivered by Buyer and constitutes the legal, valid, and binding obligation of
the Buyer enforceable against the Buyer in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors' rights in general or general principles
of equity.
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4. RESTRICTIONS ON TRANSFER.
4.1 Restrictions on Transfer. Buyer agrees that
it will not sell, transfer, or otherwise dispose of any of the Shares, except
pursuant to an effective registration statement under the Securities Act or an
exemption from the registration requirements of the Securities Act and the
Company has received an opinion of counsel satisfactory to the Company that such
exemption is available.
4.2 Legend. Each certificate for the Shares
shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY BE SOLD OR OTHERWISE TRANSFERRED
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE AND THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH EXEMPTION IS AVAILABLE."
5. REGISTRATION RIGHTS.
5.1 Piggyback Registration. From the date of
this agreement until the second anniversary thereof, if the Company proposes to
file a registration statement under the Securities Act with respect to an
offering for its own account of any class of security (other than a registration
statement on Form S-4 or S-8 or successor forms thereto or filed in connection
with an exchange offer or business combination or an offering of securities
solely to the Company's existing stockholders), then the Company shall in each
case give written notice of such proposed filing to the Buyer at least thirty
days before the anticipated filing date, and such notice shall offer the Buyer
the opportunity to register such number of shares of Common Stock of the Company
as the Buyer may request. Upon the written request of the Buyer made within
twenty days of receipt of such notice, the Company shall use its best efforts to
cause the managing underwriter or underwriters of a proposed underwritten
offering to permit the Buyer to include such shares in such offering on the same
terms and conditions as any shares of Common Stock of the Company included
therein. Notwithstanding the foregoing, if the managing underwriter or
underwriters of such offering delivers a written opinion to the Buyer that the
total number of shares which it, the Company and any other persons or entities
intend to include in such offering may adversely affect the success or offering
price of such offering, then the number of shares to be offered for the account
of the Buyer shall be reduced pro rata to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount
recommended by such managing underwriter (or, if applicable, excluding such
shares entirely), provided that if shares are being offered for the account of
other persons or entities as well as the Company, such reduction shall not
represent a greater fraction of the number of shares intended to be offered by
the Buyer than the fraction of similar reductions imposed on such other persons
or entities other than the Company over the amount of securities they intended
to offer. In the event that the registration proposed by the Company is an
underwritten primary offering of its securities and the Buyer does not sell its
securities to the underwriter of the Company's securities in connection with
such offering, the Buyer shall, to the extent permitted by applicable law or
regulation, refrain from selling any of its securities during the period of
distribution of the
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Company's securities by such underwriter in the primary offering and the period
in which the underwriter participates in the aftermarket and for such additional
period requested by the underwriter, provided, however, that the Buyer shall, in
any event, be entitled to sell its securities in connection with such
registration statement commencing on the 90th day after the effective date of
such registration statement.
5.2 Blue Sky. In connection with the
registration of its securities pursuant to Section 5.1, the Company shall use
all reasonable efforts to register and qualify its securities covered by such
registration statement under such securities or Blue Sky laws of such
jurisdictions within the United States as the Buyer shall reasonably request and
do any and all such other acts and things as may be reasonably necessary or
advisable to enable the Buyer to consummate the disposition in such
jurisdictions of the securities held by the Buyer; provided that the Company
shall not be required to consent to general service of process, to qualify, to
do business or subject itself to tax liability in any jurisdiction in which it
has not, as of the effective date of such registration, qualified to do
business.
5.3 Expenses. All expenses in connection with
registrations of the Shares shall be borne by the Company except for
underwriting discounts and commissions, applicable transfer taxes, expenses
associated with blue sky registrations requested by Buyer pursuant to Section
5.2, and expenses of counsel to the Buyer, which shall be borne by the Buyer.
5.4 Indemnification.
(a) Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless the Buyer, its General Partner,
limited partners, and its affiliates and each of their officers, directors,
trustees, agents and employees and each person, if any, who controls the Buyer
("Controlling Person") within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act against any and all loss, liability, claim,
damage and expense whatsoever (including but not limited to any and all legal or
other expenses reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever) to
which it may become subject under the Securities Act, the Securities Exchange
Act of 1934, as amended ("Exchange Act") or any other statute or at common law
or otherwise, arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any registration statement (a
"Registration Statement") in which the Buyer's securities shall be included or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to the Buyer by the Buyer expressly for
use in the Registration Statement. The Company agrees promptly to notify the
Buyer of the commencement of any litigation or proceedings against the Company
or any of its officers, directors or controlling persons in connection with the
issue and sale of the Shares in connection with the Registration Statement.
(b) If any action is brought against the Buyer
in respect of which indemnity may be sought against the Company pursuant to
Section 5, Buyer shall promptly notify the Company in writing of the institution
of such action and the Company shall assume the defense of such action,
including the employment and fees of counsel (subject to the approval
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of Buyer) and payment of actual expenses. Buyer shall have the right to employ
its own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of Buyer unless (i) the employment of such counsel shall
have been authorized in writing by the Company in connection with the defense of
such action, or (ii) the Company shall not have employed counsel to have charge
of the defense of such action, or (iii) the Buyer shall have reasonably
concluded that there may be defenses available to it which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to direct the defense of such action on behalf of the Buyer),
in any of which events the fees and expenses of not more than one additional
firm of attorneys selected by Buyer and/or controlling person shall be borne by
the Company. Notwithstanding anything to the contrary contained herein, if Buyer
shall assume the defense of such action as provided above, the Company shall
have the right to approve the terms of any settlement of such action which
approval shall not be unreasonably withheld.
(c) Buyer agrees to indemnify and hold harmless each
of the Company, its directors, officers and employees and any underwriter (as
defined in the Securities Act) and each Controlling Person of the Company,
against any and all loss, liability, claim, damage and expense described in the
foregoing indemnity from the Company to Buyer, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions directly
relating to Buyer in the Registration Statement, and in strict conformity with,
written information furnished to the Company by Buyer expressly for use in the
Registration Statement. In case any action shall be brought against the Company
or any other person so indemnified based on the Registration Statement, and in
respect of which indemnity may be sought against Buyer, Buyer shall have the
rights and duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to Buyer by the provisions of
paragraph (b) above.
5.5 Contribution.
(a) In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) any person
entitled to indemnification under this Section 5 makes claim for indemnification
pursuant hereto but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5 provides for indemnification in such case, or (ii) contribution
under the Securities Act, the Exchange Act, or otherwise may be required on the
part of any such person in circumstances for which indemnification is provided
under this Section 5, then, and in each such case, the Company and Buyer shall
contribute, in proportion to their relative fault, to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company and Buyer, as incurred; provided,
that, no person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(b) Within fifteen days after receipt by any party
to this Agreement (or its representative) of notice of the commencement of any
action, suit or proceeding, such party will, if a claim for contribution in
respect thereof is to be made against another party (the "contributing party"),
notify the contributing party of the commencement thereof, but the omission
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to so notify the contributing party will not relieve it from any liability which
it may have to any other party other than for contribution hereunder. In case
any such action, suit or proceeding is brought against any party, and such party
notifies a contributing party or its representative of the commencement thereof
within the aforesaid fifteen days, the contributing party will be entitled to
participate therein with the notifying party and any other contributing party
similarly notified. Any such contributing party shall not be liable to any party
seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution on account of any
settlement of any Claim, action or proceeding effected by such party seeking
contribution without the written consent of such contributing party. The
contribution provisions contained in this Section 5 are intended to supersede,
to the extent permitted by law, any right to contribution under the Securities
Act, the Exchange Act or otherwise available.
6. MISCELLANEOUS.
6.1 Expenses. Each party shall be liable for its
own expenses in connection with the transactions contemplated by this Agreement.
6.2 Amendments. This Agreement may not be changed
orally, but only by an agreement in writing signed by the party against whom
enforcement is sought.
6.3 Successors and Assigns. All covenants and
agreements in this Agreement contained by or on behalf of either of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the Company and of Buyer, whether so expressed or not.
6.4 Notices, Etc. All notices, requests, demands
and other communications hereunder shall be in writing and shall be delivered in
person or mailed by certified or registered mail first-class, postage prepaid:
If to the Company: with a copy to:
Individual Investor Group, Inc. Individual Investor Group, Inc.
0000 Xxxxxxxx, 00xx Xxxxx 0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxxx X. Xxxxxxxxx Attn: General Counsel
If to the Buyer:
Wise Partners, X.X. Xxxxxxxx Xxxxxx & Xxxxxx
c/o Xxxxxxxx Xxxxxxxxx 000 Xxxxx Xxxxxx
Individual Investor Group, Inc. Xxx Xxxx, Xxx Xxxx 00000
0000 Xxxxxxxx, 00xx Xxxxx Attn: Xxxxx Xxxxxx, Esq.
Xxx Xxxx, Xxx Xxxx 00000
Any such notice, request, demand or other communication hereunder shall be
deemed to have been duly given or made and to have become effective (i) if
delivered by hand, at the time of receipt thereof and (ii) if sent by registered
or certified first-class mail, postage prepaid, five business days thereafter.
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Any party may, by written notice to the other, change the
address to which notices to such party are to be delivered or mailed.
6.5 Governing Law. This Agreement is being
delivered and is intended to be performed in the State of New York and shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the law of such State.
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Agreement as of the date first above written.
COMPANY: BUYER:
INDIVIDUAL INVESTOR GROUP, INC. WISE PARTNERS, L.P.
By: BY:
----------------------------- -------------------------------
Xxxx Xxxxxxxxx Xxxxxxxx Xxxxxxxxx
Senior Vice President General Partner
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