September 29, 1999
Mr. Xxxxxxxx Xxxxxxxxx
Individual Investor Group, Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Re: Binding Letter Agreement
Dear Xxxxxxxx:
1. This letter (the "Letter Agreement") dated as of September 29, 1999 (the
"Effective Date") will confirm our agreement that, subject to the terms and
conditions hereof, Individual Investor Group, Inc. ("II") and Telescan,
Inc. ("Telescan") shall enter into a License and Service Agreement (the
"License and Service Agreement) in accordance with and containing the terms
contained in this Letter Agreement and the License and Service Agreement
Term Sheet attached hereto as Attachment 1. The parties intend that the
License and Service Agreement when executed shall supersede this Letter
Agreement.
2. II shall license the Telescan Features (defined on Attachment 1) to be
received and displayed on (a) all websites owned and operated by or on
behalf II and (b) XxxxxxxXxxxxxxx.xxx (collectively, "II Websites"). With
respect to each II Website, II shall have the sole discretion to select
which, if any, Telescan Features shall be displayed on such II Website.
3. II shall pay the License Fee (defined on Attachment 1) for each of the
Telescan Enterprise Technology Licenses (defined on Attachment 1). II shall
pay the Aggregate License Fee (defined on Attachment 1) upon execution of
this Letter Agreement. Telescan represents that the pricing and terms under
this Letter Agreement with respect to the Telescan Enterprise Technology
Licenses (defined on Attachment 1) and the Service (defined on Attachment
1) are equivalent to and no worse than the pricing and terms upon which
Telescan is currently providing equivalent products and/or services (except
pursuant to agreements entered into by Telescan more than one year prior to
the Effective Date, so long as not all current customers of such products
and/or services are so excluded) .
4. II shall pay the Aggregate License Fee (defined on Attachment 1) by issuing
and delivering to Telescan a certificate reflecting the number of shares of
II common stock obtained by dividing the Aggregate License Fee by the
average of the closing prices of II common stock as reported by Nasdaq over
the seven business days prior to the Effective Date. II shall file at its
expense, within thirty (30) days of the execution of this Letter Agreement,
a registration statement with respect to the shares issued pursuant to this
paragraph. In connection with the issuance of the License Fee Shares, the
parties shall execute a Stock Purchase Agreement in substantially the form
set forth on Attachment 3.
5. Telescan shall provide the Service (defined on Attachment 1) and the
Development Work (defined on Attachment 1) to any of the II Websites that
II may designate (the "Telescan Hosted II Sites; II Websites that are not
Telescan Hosted II Sites shall be referred to as "Licensed Sites").
Telescan also shall provide the Service and Development Work to pages of
Licensed II Sites containing Telescan Features (the "Telescan Feature
Pages"). Each Telescan Feature Page shall have the branding of the
applicable Licensed II Site. II will be responsible for the site
navigation, architecture and development of the "look and feel" of the II
Websites and the Telescan Feature Pages. If II desires Telescan to perform
any work beyond the Service, the parties will mutually agree upon the fees
to be paid to Telescan for such additional work; Telescan agrees that such
fees will not exceed the lowest rates it is then-currently charging to
third parties for similar development work, excluding work performed
pursuant to agreements entered into more than one year prior to the
Effective Date; in the event Telescan receives non-cash consideration with
respect to such development work, the rate for such development work shall
be based upon the fair market value of the consideration received. Each
page of the Telescan Hosted II Sites and each Telescan Feature Page shall
include a "Powered by Telescan" logo (164 x 41 pixel size) and Telescan's
copyright information in the footer of the page.
6. If Telescan purchases, licenses or otherwise acquires the rights to any New
Feature (as defined on Attachment 1), Telescan will promptly notify II in
writing of the availability of such New Feature. Upon request from II and
the agreement of the parties upon any additional charges and fees
("Additional Charges") to be paid by II for such New Feature, Telescan will
add such New Feature to the Service (upon such addition, the New Feature
shall be deemed a Telescan Feature). The Additional Charges shall not
exceed (a) with respect to incremental fees, costs and expenses that
Telescan would incur to provide the New Feature to II (e.g., a per look-up
fee with respect to real-time quotes), the amount of such incremental fees,
costs and expenses (i.e., without a xxxx-up) and (b) with respect to any
other fees, costs and expenses incurred by Telescan with respect to the
licensing or acquisition of the New Feature (e.g., a one-time licensing
fee, or the purchase price for the feature), the amount of such fees, costs
and expenses multiplied by a fraction that reflects the reasonably
anticipated usage of the New Feature by II during the Term (defined below)
as a proportion of the total reasonably anticipated usage of the New
Feature by Telescan and its licensees (including II) over the useful life
of the feature.
7. For providing the Service to the Telescan Hosted II Sites, Telescan shall
receive 15% of the Net Revenue (defined on Attachment 1) received with
respect to the Telescan Hosted II Sites. For providing the Service to the
Telescan Feature Pages, Telescan shall receive 15% of the Net Revenue
received with respect to the Telescan Feature Pages. II shall pay such fees
within 30 days of the end of the calendar month in which the Net Revenue is
collected by II. To the extent that II receives applicable Net Revenue in
the form of non-cash consideration, II shall pay Telescan one of the
following, at II's election: (a) cash equal to 15% of the Fair Market Value
(defined below) of the non-cash consideration; (b) 15% of the non-cash
consideration in kind; or (c) the number of shares of II common stock
obtained by dividing (i) 15% of the Fair Market Value by (ii) the average
of the closing price of II common stock as reported by Nasdaq over the
seven business days prior to the issuance. As used herein, "Fair Market
Value" means the value of the non-cash consideration received by II, as
reflected on II's quarterly income statements (excluding any gains or
losses related to the sale or other disposition of assets). If II wishes to
pay Telescan pursuant to clause (b), II must notify Telescan in writing of
II's election. Within ten (10) calendar days of II's notice, Telescan may
notify II in writing that Telescan rejects the proposed form of payment; if
Telescan timely delivers such written notice, then, notwithstanding the
foregoing, II shall pay Telescan pursuant to clause (a) or clause (c), at
II's election.
8. Telescan will provide the Service for the Term so long as II renders all
compensation due Telescan under this Letter Agreement and the License and
Service Agreement. Prior to the execution of the License and Service
Agreement, if Telescan has materially breached this Letter Agreement, II
must inform Telescan of the material breach of service in writing (the
"Default Notice") to Telescan at the address set forth below. Telescan
agrees that it will use reasonable efforts to correct any such material
breach as promptly as possible. If after thirty (30) days after receipt of
the Default Notice, Telescan has not made reasonable efforts to correct the
material breach, the contract will be considered in default ("Material
Default") and II may terminate this Letter Agreement upon written notice to
Telescan ("Termination Notice"). In the event that II terminates this
Letter Agreement as a result of any such Material Default, Telescan will
remit to II (within 30 days of the Termination Notice) liquidated damages
in the amount of one thousand dollars ($1,000) for each day commencing with
the date of the Default Notice and ending on the third anniversary of the
Effective Date. The parties agree that the actual damages suffered by II as
a result of a Material Default would be difficult to ascertain, and each
party agrees that the liquidated damages set forth above are reasonable
estimates of the harm that II would be expected to suffer. The License and
Service Agreement shall contain a provision providing for the payment to II
of liquidated damages as calculated above, in the event of termination of
the License and Service Agreement due to a material breach of the License
and Service Agreement with respect to which material breach Telescan did
not, within 30 days after receipt of the Default Notice, make reasonable
efforts to correct.
9. II shall reimburse Telescan for all actual royalties, license fees or other
similar fees payable by Telescan (without a xxxx-up) to third party data,
content and service providers associated with providing the Service. Such
payment shall be made by II within 30 days of receipt of an invoice
therefor, setting forth the calculation of such amount in reasonable detail
and providing such supporting documentation as II reasonably may request.
The current list of Data Vendors and Content Providers is set forth in
Attachment 2. Telescan shall provide II promptly after request with a list
of the royalties, license fees and other similar fees payable by Telescan
to third party data, content and service providers associated with
providing the Service.
10. Telescan shall provide Usage and Tracking Reports to II on a weekly basis.
The Usage and Tracking Reports shall contain the following information:
usage reports including pages viewed with segments of the Telescan Hosted
II Sites and Telescan Feature Pages; inbound link reports including the
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number of successful coded URL page requests from links originating outside
of the Telescan Hosted II Sites and Telescan Feature Pages; and information
sufficient to establish and monitor each of the metrics defined in the
License and Service Agreement. Telescan shall also collect requested and
defined survey information, store it in a database, and provide a nightly
FTP file available for import by II. (Additional work required to provide
this file will be billed and paid at Telescan's then-current published
rates.) The parties shall not use or disclose, other than to further the
performance of their obligations under the License and Service Agreement,
any confidential information of the other party, during the Term or for a
period of one year thereafter.
11. The "Term" of the License and Service Agreement shall be 3 years from the
Effective Date.
12. II will (in its reasonable discretion) define the advertising inventory on
the Telescan Hosted II Sites and the Telescan Feature Pages. II will have
sole responsibility for serving the advertising. II shall use reasonable
efforts to sell the advertising inventory, but does not warrant that any
particular level of advertising will be sold or that any particular level
of revenue will be collected with respect to such sales. If II does not
sell the entire advertising inventory, the parties will agree upon a plan
by which Telescan can sell a portion of the advertising inventory (subject
to II's reasonable approval as to advertisers and creative). In such case,
Telescan will be entitled to keep 15% of the Net Revenue from such sales
and would remit the balance to II, within 30 days of Telescan's receipt of
such revenue.
13. Telescan will take a project management approach in the execution of its
duties as they relate to the Service. Telescan will collaborate with II on
the design, development, management and maintenance of Telescan Hosted II
Sites and Telescan Feature Pages strategic to II's internet initiatives. On
an as-needed basis, Telescan will participate in II product planning and
strategy sessions in order to suggest various combinations, customizations
and implementations of Telescan technologies.
14. Telescan will provide phone-based technical support on issues related to
the successful operation of the Service to II customer service
representatives, on a 24 hours per day, seven days per week basis. Telescan
will provide e-mail based technical support on issues related to the
successful operation of the Service to II customer service representatives
during weekdays between 8:00 a.m. and 5:00 p.m., Central Time.
15. If II should choose to use newsletters provided by Telescan or its
subsidiaries on the II Websites, II will remit 85% of the Net Revenue
received from those subscriptions to Telescan. If II should choose to use
third-party newsletters on the II Websites, II will remit 15% of the Net
Revenue received from those subscriptions to Telescan.
16. The parties agree that the following information shall be deemed
"Confidential Information" as to which II is the "Disclosing Party," as
those terms are used in the Mutual Confidentiality Agreement dated as of
July 26, 1999 between the parties: (a) operating metrics and financial
performance of Telescan Hosted II Sites and Telescan Feature Pages; (b)
calculation of Net Revenue of Telescan Hosted II Sites and Telescan Feature
Pages; and (c) information related to the planning or evaluation of
potential new Telescan Hosted II Sites and Telescan Feature Pages.
17. II and Telescan shall mutually agree on the form and content of any public
announcement which shall be made concerning this letter agreement or the
transactions contemplated hereby, and neither II nor Telescan shall make
any such public announcement or disclosure relating to this letter
agreement or the transactions contemplated hereby without the consent of
the other; provided that nothing herein shall prohibit II or Telescan, upon
notice to the other party, from making any public filing or disclosure
required by law or the policy of any exchange on which such party's (or its
parent's) securities are listed.
18. Performance by the parties pursuant to this Letter Agreement shall be as
independent contractors. Nothing contained herein or done under the terms
of this Letter Agreement shall constitute the parties entering into a joint
venture or partnership, or shall constitute any party the agent of any
other party for any purpose.
19. If any provision of this Letter Agreement is held invalid, illegal or
unenforceable in any respect (an "Impaired Provision"), (a) such Impaired
Provision shall be interpreted in such a manner as to preserve, to the
maximum extent possible, the intent of the parties, (b) the validity,
legality and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby, and (c) such decision shall not affect
the validity, legality or enforceability of such Impaired Provision under
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other circumstances. The parties agree to negotiate in good faith and agree
upon a provision to substitute for the Impaired Provision in the
circumstances in which the Impaired Provision is invalid, illegal or
unenforceable.
20. This Letter Agreement and its attachments (the "Documents") represent the
entire agreement of the parties with respect to the subject matter hereof,
and supersede all other discussions, whether written or oral. The terms of
the Documents may not be modified or amended except in a writing signed by
each party.
21. The failure of any party hereto to enforce, or the delay by any party in
enforcing, any of its rights under the Documents shall not be deemed a
waiver or a continuing waiver of such rights or a modification of the
Documents, and such party may enforce any or all such rights at any time
thereafter, subject to any applicable statute of limitations. No waiver of
a particular breach or default of the Documents shall be deemed a waiver of
any other breach or default of the Documents. All rights and remedies,
whether conferred by the Documents, by any other instrument or by law,
shall be cumulative, and may be exercised singularly or concurrently.
22. Neither party may assign the Documents or any rights under the Documents
without the express written permission of the other parties, and any
attempt to do so shall be null and void; provided however that either party
may assign all or any portion of its rights under the Documents to any
entity that it controls, is controlled by or under common control with.
Subject to the foregoing, the Documents shall be binding upon and shall
inure to the benefit of the respective permitted successors and assigns of
the parties.
23. Each of the Documents may be executed in counterparts, and when each party
has signed and delivered at least one such counterpart, each counterpart
shall be deemed an original, and, when taken together with other signed
counterparts of such Document, shall constitute one instrument, which shall
be binding upon and effective as to all parties. A signature received via
facsimile or photocopy shall be deemed an original for all purposes.
24. If the foregoing correctly sets forth your understanding of our intentions
with respect to the matters discussed herein, please indicate the same by
executing a copy of this Letter Agreement as provided below and returning
the same to the undersigned.
25. Any notice or communication required or permitted to be given under this
Letter Agreement shall be deemed delivered if sent by: (i) personal
delivery, with proof of delivery; (ii) expedited delivery service (e.g.;
Federal Express, DHL), with proof of delivery; (iii) registered or
certified U.S. mail, eturn receipt requested; or (iv) facsimile or telex
transmission, provided each transmission is confirmed. Each such notice
shall be deemed delivered if addressed as provided below (or to such
different addresses or to the attention of such other persons as may be
designated from time to time by such party by written notice to the other
parties in accordance with this Section). Any such notice or communication
shall be deemed to have been delivered: (a) upon the date of delivery
pursuant to clause (i) or (ii); (b) upon receipt of a transmission
confirmation if sent by facsimile or telex; or (c) in the case of U.S.
mail, five (5) calendar days after deposit, postage pre-paid, in the mails
of the U.S.
If to Telescan: If to II:
Telescan, Inc. Individual Investor Group, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000 000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
tel: 000-000-0000 tel: 000-000-0000
fax: 000-000-0000 fax: 000-000-0000
Attn: Xxxxx X. Xxxxxxxxx Attn: General Counsel
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26. This Letter Agreement shall become binding upon each of the parties,
simultaneously with the execution of the Stock Purchase Agreement of
approximately even date herewith between the parties related to the
purchase of II common stock for a payment of three million dollars.
Telescan, Inc. Individual Investor Group, Inc.
By: _________________________ By: _________________________
Name: _________________________ Name: _________________________
Title: _________________________ Title: _________________________
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Attachment 1
License and Services Agreement Term Sheet
1. The "Telescan Enterprise Technology Licenses" means perpetual, worldwide,
non-exclusive licenses to the following, and the "License Fee" attributable to
each Telescan Enterprise Technology License shall be as set forth below.
Telescan Enterprise Technology License License Fee
----------------------------------------------- -----------
> Host System Software and Technology License: $72,000
> Base Internet Technology License: $62,500
> Base SQL Interface Technology License: $62,500
> Base Quotes License: $37,500
> Base News License: $37,500
> Base Technical Charting License: $37,500
> Base Portfolio Tracker License: $225,000
> Base ProSearch Technology License: $375,000
> Add on: ProSearch - "Telescan Rankings" License Upgrade $225,000
2. The "Aggregate License Fee" means One Million One Hundred Thirty-Four
Thousand and Five Hundred US Dollars. ($1,134,500), which equals the sum of the
License Fees for each Telescan Enterprise Technology License set forth above.
3. The "Service" means all hosting services, maintenance and support necessary
to enable the Telescan Hosted II Sites and Telescan Feature Pages to operate in
a manner reasonably acceptable to II, including without limitation (a) writing
the computer code necessary to allow the Telescan Hosted II Sites and Telescan
Feature Pages to be functional, (b) hosting and database management of all
Telescan Hosted II Sites and Telescan Feature Pages, (c) parsing of all data for
presentation and integration into the Telescan Hosted II Sites and Telescan
Feature Pages, (d) network and bandwidth management, (e) server management,
problem management and resolution and load balancing, (f) customer registration
and authentication, (g) customer service support and (h) a reasonable level of
redundant and back-up systems.
4. The "Development Work" means, for each II Website: (a) the development work
needed to bring such website (or the applicable pages thereof) up on the
Service, not to exceed four man-weeks of effort - if the level of requested work
exceeds four man-weeks, II will be responsible for the excess hours, and all
such work will be performed at then-current Telescan rates; and (b) commencing
upon the initial launch of a Telescan Hosted II Site or Telescan Feature Page,
development work not to exceed two man-days in order to enact changes or
modifications that II may request - if the level of requested work exceeds two
man-days, II will be responsible for the excess hours, and all such work will be
performed at then-current Telescan rates, excluding work performed pursuant to
agreements entered into more than one year prior to the Effective Date; in the
event Telescan receives non-cash consideration with respect to such development
work, the rate for such development work shall be based upon the fair market
value of the consideration received. As used herein, a "man-day" and "man-week"
mean eight hours of effort of a person possessing reasonable skills in the
necessary work. The then-current Telescan rates charged pursuant to this
paragraph shall not exceed the lowest rates charged by Telescan to third parties
for similar development work.
5. "Telescan Features" means all current and future technology, tools, content
and applications incorporated into Telescan's xxxxxxxxxxxxxx.xxx website
("WSC"), including those developed or acquired by Telescan during the Term, and
including all of the data and content listed on Attachment 2 hereto. "Telescan
Features" shall not include any Telescan Restricted Features or New Features
(except that Telescan Features will include New Features that are added to the
Service pursuant to the agreement of the parties).
-6-
6. "New Features" means any new technology, tools, content and applications
licensed by Telescan from a third party or acquired by Telescan from a third
party (through a significant outlay of resources or via acquisition) with the
right to provide such licensed or acquired New Feature through WSC, or to
Telescan's alliance partners such as II, or as an II Restricted Feature.
7. "II Restricted Features" means all updates, upgrades, additions, and
revisions to the Telescan Features and New Features developed by Telescan for II
on a "work for hire" or exclusive basis, such that Telescan is contractually
restricted from providing the same to its other customers or to WSC.
8. "Telescan Restricted Features" means any updates, upgrades, additions and
revisions to Telescan Features or new features developed by Telescan for third
parties on a "work for hire" or an exclusive basis such that Telescan is
contractually restricted from providing the same to II, provided that Telescan
will not agree to any such restriction unless it applies to all of its other
customers and to WSC.
9. "Net Revenue" means Gross Revenue less Specified Expenses. "Gross Revenues"
means all revenue, fees, charges and other amounts collected from end users,
advertisers, sponsors and other users of the Telescan Hosted II Sites and
Telescan Feature Pages (net of refunds and make-goods), including without
limitation all online charges, sponsorship fees, subscription fees, vendor fees,
insertion fees, product sales fees, and advertising charges, that were earned
during the Term. "Specified Expenses" means the following expenses incurred by
or on behalf of II in connection with the Service:
(i) All state sales and use taxes.
(ii) All merchant fees payable to any credit card issuers, check or other
processing fees, credits for services and bad debt incurred in
connection with the Service by II or Telescan, as applicable.
(iii) All royalties, license fees or other similar fees payable to third
party data and service providers.
(iv) As to any product sold on the Service, the actual cost paid to third
parties by II for that product (net of rebates).
(v) As to any advertisement sold on or in connection with the Service, II's
actual cost of any commissions paid to II sales personnel or third
parties for the procurement of advertisements, sponsorships or other
promotions (and, if applicable, Telescan's actual cost of any
commissions paid to Telescan sales personnel or third parties for the
procurement of advertisements, sponsorships or other promotions).
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Attachment 2
Data Vendors and Content Providers - As Of July, 1999
North American Quotes
---------------------
American CME
New York XXXX
NASDAQ Toronto
OPRA Montreal
NYMEX Vancouver
CYMEX Alberta
CEC Winnipeg
CBOT
Other North American Security Feeds
-----------------------------------
Dow Xxxxx Index Feed
Xxxxxxx Financial - Dividends & Splits
Xxxxxx Data - End of day h/l/v pricing file
International Quotes
--------------------
Dow Xxxxx Global Index Feed
News Wire Feeds
---------------
o Interactive Sports Wire
o Comtex o ITAR/TASS News Agency
o A&G Information Services o M2 Communications
o Africa News Service o Newsbytes News Network
o AsiaInfo Services, Inc. o PR Newswire
o Business Wire o South American Business Information
o Canadian Corporate News o The Sports Network
o The Content Factory o States News Service
o Cineman o United Press International (UPI)
o Compass Middle East Wire o U.S. Newswire
o FedNet Government News o Washington Technology
o Futures World News (FWN) o Xinhua News Agency
o InfoLatina o World Entertainment News Network
o Inter Press Service (IPS) o Ziff-Wire Highlights
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ATTACHMENT 2
------------
Data Vendors and Content Providers
----------------------------------
- continued -
Fundamentals, Earnings, Research, Commentary, etc.
--------------------------------------------------
Daily Market Consensus
Market Guide - Fundamentals
Xxxxxxx - Xxxxxxx Xxxxxxx (and Institutional Holders)
Zack's - Earnings Estimates
S&P Industry Groups
Macro*World Price Forecasts
J & J Mutual Funds
IDEA
Soon To Be Added
----------------
XXXXXXxxxx.xxx - 3rd Qtr. 1999
Hoovers Capsules & Profiles - 3rd Qtr. 1999
Hoovers IPO Central - 3rd Qtr. 1999.
Microcap 1000 - 3rd Qtr. 1999
Media General Fundamental Information - 1st Qtr. 0000
-0-
Xxxxxxxxxx 3
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") dated as of September 29,
1999 (the "Effective Date"), is entered into between INDIVIDUAL INVESTOR GROUP,
INC., a Delaware corporation with its principal place of business at 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and TELESCAN,
INC., a Delaware corporation, having its principal place of business at 0000
Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 (the "Buyer").
1. SALE AND ISSUANCE OF COMMON STOCK.
1.1 Subject to the terms and conditions of this Agreement, at the
Closing (as defined below) Buyer agrees to purchase from the Company, and the
Company agrees to sell, issue and deliver to Buyer, the number of shares (the
"Shares") of the Company's common stock, par value $0.01 per share ("Common
Stock") obtained by dividing ONE MILLION ONE HUNDRED THIRTY-FOUR THOUSAND AND
FIVE HUNDRED DOLLARS ($1,134,500) (the "Purchase Price") by the Purchase Price
Per Share (as defined below) of the Common Stock. As used herein, "Purchase
Price Per Share" shall mean the average of the last sale prices of the Common
Stock, as reported by Nasdaq, for the seven business days prior to the date of
the Closing.
2. CLOSING.
2.1 The closing of the transaction contemplated by the Agreement (the
"Closing") is conditioned upon (a) the closing of that certain Stock Purchase
Agreement of approximately even date herewith between the parties related to the
purchase of Common Stock for a payment of three million dollars and (b) the
execution of the binding letter agreement between the parties dated as of
September 29, 1999 concerning a License and Service Agreement (the "Letter
Agreement").
3. CLOSING ITEMS.
3.1 At the Closing, the Company shall deliver, or cause to be
delivered, to Buyer resolutions of the board of directors of the Company
authorizing the execution, delivery and consummation of this Agreement, the
issuance of the Shares and the other matters contemplated hereby, certified as
to their due adoption and continued validity by the Secretary of the Company.
3.2 Promptly (and in no event more than five (5) business days) after
the Closing, the Company shall deliver, or cause to be delivered, to Buyer one
or more certificates (as requested by Buyer) representing in the aggregate the
Shares.
3.3 At the Closing, Buyer shall deliver, or cause to be delivered, an
executed copy of the Letter Agreement.
4. FURTHER ASSURANCES. Each party shall execute such additional documents and
take such other actions as the other party or parties may reasonably request to
consummate the transactions contemplated hereby and otherwise as may be
necessary to effectively carry out the terms and provisions of this Agreement.
5. REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company hereby represents
and warrants to and covenants with Buyer as follows:
5.1 Organization. The Company is duly organized, validly existing and
in good standing in the State of Delaware. The Company has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted and as presently proposed to be
conducted and to execute, deliver and perform this Agreement. The Company is
duly licensed, authorized and qualified to do business and is in good standing
in all jurisdictions (domestic or foreign) in which the conduct of its business
or the ownership or leasing of its properties requires it to be so licensed,
authorized or qualified, except where its failure to be so licensed, authorized
or qualified would not have a material adverse effect, singularly or in the
aggregate, on the results of operations, financial condition, properties,
business or prospects of the Company (a "Material Adverse Effect").
5.2 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.
5.3 Financial Condition. The consolidated financial statements of the
Company included in the Disclosure Documents (as described in Section 5.11)
fairly present on a consolidated basis the financial position, the results of
operations, the changes in financial position and the changes in stockholders'
equity and the other information purported to be shown therein of the Company
and its consolidated subsidiaries at the respective dates and for the respective
periods to which they apply and such financial statements have been prepared in
conformity with generally accepted accounting principles, consistently applied
throughout the periods involved, and all adjustments necessary for a fair
presentation of the results for such periods have been made.
2
5.4 Validly Issued Shares. The Shares to be issued, sold and delivered
in accordance with the terms of this Agreement for the consideration set out
herein, will, upon issuance in accordance with the terms hereof, be duly and
validly issued, fully paid and nonassessable, free of restrictions on transfer
other than restrictions on transfer under this Agreement and under applicable
federal and state securities laws. The issuance of the Shares to Buyer pursuant
to this Agreement will comply with all applicable laws, including federal and
state securities laws, and will not violate the preemptive rights of any person.
5.5 Consents. No consent, approval, qualification, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, or other third party is required by or
with respect to the Company in connection with the execution and delivery of
this Agreement, or the consummation by the Company of the transactions
contemplated hereby, which has not already been obtained, except for the filing
of any notices of sale required to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act")
or Securities Exchange Act of 1934, as amended (the "Exchange Act") or with the
Nasdaq Stock Market, or such post closing filings as may be required under
applicable state securities laws which will be timely filed within the
applicable periods therefor.
5.6 Litigation. There is no action, suit, proceeding or investigation
pending or to the Company's knowledge currently threatened against the Company,
nor does the Company have any actual knowledge that there is any basis for the
foregoing, except for those disclosed in the Disclosure Documents, those for
which there has been no manifestation by a potential claimant of an awareness of
a possible claim and for which the Company has not determined that it is
probable that a claim will be asserted, and those which, if adversely
determined, would not reasonably be expected to have a Material Adverse Effect.
The foregoing includes, without limitation, actions, suits, proceedings or
investigations pending or threatened involving the prior employment or
engagement of any of the Company's employees or consultant, their use in
connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers or their current
employers/clients (in the case of consultants), or their obligations under any
agreements with such employers/clients. The Company is not a party or subject to
the provisions of any order, writ, injunction, judgment or decree of any court
or government agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or that the Company intends to
initiate.
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5.7 Compliance with Other Instruments. The Company is not in violation
or default in any material respect of any provision of its Restated and Amended
Certificate of Incorporation, as amended, or bylaws, or in any material respect
of any instrument, judgment, order, writ, decree or contract to which it is a
party or by which it is bound, or, to the best of its knowledge, of any
provision of any federal or state statute, rule or regulation applicable to the
Company; except where such violation or default would not reasonably be expected
to have a Material Adverse Effect. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby will
not result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree or contract or an
event that results in the creation of any lien, charge or encumbrance upon any
assets of the Company or the suspension, revocation, impairment, forfeiture, or
nonrenewal of any material permit, license, authorization, or approval
applicable to the Company, its business or operations or any of its assets or
properties, except where such violation, default, event, suspension, revocation,
impairment, forfeiture or nonrenewal would not reasonably be expected to have a
Material Adverse Effect.
5.8 Material Facts. The Company has provided Buyer with all the
information reasonably available to it that Buyer has requested for deciding
whether to purchase the Shares. The representations and warranties by the
Company contained in this Agreement, when taken together with the Disclosure
Documents, do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they are made, not misleading,
except, with respect to assumptions, projections and expressions of opinions or
predictions contained in the documents or written materials furnished by the
Company, the Company represents only that such assumptions, projections and
expressions of opinions and predictions were made in good faith and the Company
believes that there is a reasonable basis therefor.
5.9 Compliance with Laws. To the best knowledge of the Company, the
Company is in compliance in all material respects with all applicable statutes,
laws, ordinances, rules, regulations and orders of any governmental entity,
except where non-compliance would not reasonably be expected to have a Material
Adverse Effect, and the Company has not received any notice or other
communication whether oral or written from any governmental entity, arbitrator
or any other person regarding any such violation or failure.
5.10 Subsequent Events. Subsequent to the respective dates as of which
information is given in the Disclosure Documents, except as described therein,
there has not been any Material Adverse Effect on the Company and its
subsidiaries, whether or not arising from transactions in the ordinary course of
business, the Company and its subsidiaries have not sustained any material loss
or interference with their businesses or properties from fire, explosion,
earthquake, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental action,
order or decree, and since the date of the latest balance sheet included in the
Disclosure Documents, neither the Company nor any of its subsidiaries has
incurred or undertaken any liability or obligation, indirect or contingent,
except for liabilities or obligations incurred or undertaken in the ordinary
course of business and except for any such liabilities or obligations as are
reflected in the Disclosure Documents.
4
5.11 Disclosure. The Company has provided to Buyer true, correct and
complete copies of its Annual Report on Form 10-K for the fiscal year ended
December 31 1998; its Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1998; its Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1999 and June 30, 1999; its Notice of Annual Meeting of
Stockholders and Proxy Statement relating to its annual meeting of stockholders
held on June 22, 1999; and its Current Report on Form 8-K dated June 2, 1999
(collectively, the "Disclosure Documents").
6. REPRESENTATIONS OF BUYER. Buyer hereby represents and warrants to the Company
as follows:
6.1 Buyer is aware that its investment in the Company involves a
substantial degree of risk, including, but not limited to the following: (i) if
the Company fails to meet the maintenance criteria for continued inclusion on
the Nasdaq National Market System ("NMS"), including but not limited to, the
requirement that the Company maintain minimum net tangible assets of at least
$4,000,000 and the requirement that the minimum bid price of the Common Stock is
at least $1.00, it may be delisted from the NMS; (ii) the Company has had
substantial operating losses for the fiscal year ended December 31, 1998 and for
the fiscal quarters ended March 31, 1999 and June 30, 1999 and expects to
continue to incur losses in the future; (iii) the Company will need additional
financing in the future to fund operating losses and for capital investment in
its current and proposed business operations; (iv) the Company's development of
its internet products is not currently generating sufficient revenue to cover
development and operating expenses, and may not be profitable in the future; (v)
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;
and (vi) the Company's success will to a significant extent rely upon the
continued services and abilities of Xxxxxxxx Xxxxxxxxx. Buyer acknowledges and
is aware that there is no assurance as to the future performance of the Company.
5
6.2 Buyer is purchasing the Shares for its 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 8 below. Subject to Section 8
below, Buyer agrees that it must bear the economic risk of its investment
because, among other reasons, the Shares have not been registered under the
Securities Act, or under the securities laws of any state and, therefore, cannot
be resold, pledged, assigned, or otherwise disposed of unless and until they are
registered under the Securities Act and under applicable securities laws of
certain states, or an exemption from such registration is available.
6.3 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 has no need for liquidity with respect to
its investment in the Company.
6.4 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 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
Buyer has relied solely upon its own investigation in making a decision to
invest in the Company.
6.5 Buyer is an "accredited investor" as defined in Section 2(15) of
the Securities Act and in Rule 501 promulgated thereunder.
6.6 The execution, delivery, and performance of this Agreement has been
duly authorized by Buyer and no other corporate proceedings on the part of Buyer
or its stockholders are required. This Agreement has been duly executed and
delivered by Buyer and constitutes the legal, valid, and binding obligation of
Buyer enforceable against 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.
7. RESTRICTIONS ON TRANSFER.
7.1 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.
6
7.2 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."
8. REGISTRATION RIGHTS.
8.1 Filing of Registration Statement. Within thirty (30) days after the
Closing Date, the Company shall file a registration statement under the
Securities Act ("Registration Statement") with respect to the Shares.
8.2 Expenses. All expenses in connection with the Registration
Statement shall be borne by the Company except for applicable transfer taxes and
expenses of counsel to Buyer, which shall be borne by Buyer.
8.3 Information Relating to Buyer. Buyer agrees that in connection with
the Registration Statement it will provide to the Company all information and
execute and deliver all documents, agreements, certificates and other items at
its expense, as the Company and/or its counsel reasonably request, and the
failure to provide such information or items shall permit the Company to delay
the filing of, or not have declared effective, the Registration Statement filed
by the Company pursuant to Section 8.1.
8.4 Indemnification.
8.4.1 Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless Buyer and its directors, officers,
employees and each person, if any (a "Controlling Person") who controls Buyer
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 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 in which 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 information furnished to the
Company with respect to Buyer by Buyer or its agents, in writing, expressly for
use in any such registration statement. The Company agrees promptly to notify
7
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 any such registration statement.
8.4.2 If any action is brought against Buyer in respect of
which indemnity may be sought against the Company pursuant to this Section 8.4,
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 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) 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 Buyer), in any of which events the reasonable 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.
8.4.3 Buyer agrees to indemnify and hold harmless each of the
Company, its directors, officers and employees, 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 any such registration statement furnished to the Company by Buyer or
its agents, in writing, expressly for use in any such registration statement. In
case any action shall be brought against the Company or any other person so
indemnified based on any such 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 8.4.2
above.
8.5 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 Section 8.4 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 Section 8.4 provides for indemnification in such
case, or (ii) contribution under the Securities Act, the Exchange Act, or
8
otherwise may be required on the part of any such person in circumstances for
which indemnification is provided under Section 8.4, 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 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 8 are intended to supersede,
to the extent permitted by law, any right to contribution under the Securities
Act, the Exchange Act or otherwise available.
9. MISCELLANEOUS.
9.1 Expenses. Each party shall be liable for its own expenses in
connection with the transactions contemplated by this Agreement.
9.2 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.
9
9.3 Notices, Etc. All notices, requests, demands and other
communications hereunder shall be in writing and shall be delivered in person,
by overnight courier or mailed by certified or registered mail first-class,
postage prepaid:
If to the Company: with a copy to:
Individual Investor Group, Inc. Xxxxxxxx Mollen & Xxxxxx
000 Xxxxx Xxxxxx, 00xx Xxxxx 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel Attn: Xxxxx X. Xxxxxx, Esq.
fax: 000-000-0000 fax: 000-000-0000
If to Buyer: with a copy to:
Telescan, Inc. Telescan, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx Attn: General Counsel
fax: 000-000-0000 fax: 000-000-0000
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 or overnight courier, at the time of receipt thereof and (ii)
if sent by registered or certified first-class mail, postage prepaid, five
business days thereafter. Any party may, by written notice to the other, change
the address to which notices to such party are to be delivered or mailed.
9.4 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, without reference to principles of choice of law.
9.5 Entire Agreement. This Agreement, together with any exhibits hereto
(which exhibits are an integral part hereof), constitutes the entire agreement
between the parties with respect to the subject matter hereof, and supersedes
all prior agreements, understandings, negotiations, representations and
proposals, written or oral, with respect to such subject matter. Each party
represents that it is not relying on any representations, whether written or
oral, not set forth in this Agreement, in determining to execute this Agreement.
9.6 Amendments. This Agreement may not be changed orally, but only by
an agreement in writing signed by the party against whom enforcement is sought.
9.7 Severability. If any provision of this Agreement is held invalid,
illegal or unenforceable in any respect (an "Impaired Provision"), (a) such
Impaired Provision shall be interpreted in such a manner as to preserve, to the
maximum extent possible, the intent of the parties, (b) the validity, legality
10
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby, and (c) such decision shall not affect the validity,
legality or enforceability of such Impaired Provision under other circumstances.
The parties agree to negotiate in good faith and agree upon a provision to
substitute for the Impaired Provision in the circumstances in which the Impaired
Provision is invalid, illegal or unenforceable.
9.8 Negotiation. The parties acknowledge that they are entering into
this Agreement after consulting with counsel and based upon equal bargaining
power, with all parties participating in its preparation. The parties
acknowledge and agree that the attorneys for each party have had an equal
opportunity to participate in the negotiation and preparation of this Agreement.
The terms of this Agreement shall not be interpreted in favor of or against any
party on account of the draftsperson, but shall be interpreted solely for the
purpose of fairly effectuating the intent of the parties hereto.
9.9 Counterparts and Facsimile/Photocopy Signatures; Authority of
Signatories. This Agreement may be executed in counterparts, and when each Party
has signed and delivered at least one such counterpart, each counterpart shall
be deemed an original, and, when taken together with other signed counterparts,
shall constitute one Agreement, which shall be binding upon and effective as to
all parties. A signature received via facsimile or photocopy shall be deemed an
original for all purposes. Each party represents that the person signing this
Agreement on the party's behalf has been duly authorized to execute this
Agreement on behalf of such party, and all of the signatories hereto signing in
a representative capacity warrant and represent that they have been duly
authorized by and on behalf of their respective principals to execute this
Agreement.
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9.10 Headings. The Article and Section headings used herein are for
convenience only and do not define, limit or construe the content of such
sections. All references in this Agreement to Article and Section numbers refer
to Articles and Sections of this Agreement, unless otherwise indicated.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
INDIVIDUAL INVESTOR GROUP, INC.
By:________________________________
Name: ______________________
Title: ______________________
TELESCAN, INC.
By:________________________________
Name: ______________________
Title: ______________________
