This STOCK PURCHASE AGREEMENT, dated as of June 26, 1998 (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 Five Million Dollars
($5,000,000), an aggregate of one million two hundred fifty nine thousand eight
hundred forty two (1,259,842) 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 Five Million Dollars
($5,000,000).
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
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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
Executive Officer of the Company. Buyer acknowledges 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
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
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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 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
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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
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
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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: Xxxx Xxxxx
If to the Buyer:
Wise Partners, L.P.
c/o Xxxxxxxx Xxxxxxxxx
Individual Investor Group, Inc.
0000 Xxxxxxxx, 00xx Xxxxx
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.
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.
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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 Xxxxx Xxxxxxxx Xxxxxxxxx
Vice President -- Finance General Partner
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