EXHIBIT 10.2
THIS STOCK PURCHASE AGREEMENT, dated as of May 1, 1997 (the "Agreement"),
is between INDIVIDUAL INVESTOR GROUP, INC., a Delaware corporation (the
"Company"), and the ▇▇▇▇▇▇▇▇ ▇▇▇▇ BASS SUCCESSOR TRUST, a trust established
under the laws of the State of Texas (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 One Million Dollars
($1,000,000), an aggregate of One Hundred Sixty-Four Three Hundred Thirty-Nine
(164,339) 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 One Million Dollars
($1,000,000).
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.
2.3 Financial Condition. The consolidated financial statements of the
Company included in the Disclosure Documents (as defined in Section 2.5) 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.
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2.4 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 change in the condition (financial or
otherwise), earnings, businesses, properties or prospects of 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.
2.5 Disclosure. The Company has provided to Buyer true, correct and
complete copies of its 1996 Annual Report; Form 10-KSB for the fiscal year ended
December 31, 1996; the draft dated April 29, 1997 of the Quarterly Report on
Form 10-QSB for the fiscal quarter ended March 31, 1997; and its Notice of
Annual Meeting of Stockholders and Proxy Statement relating to its Annual
Meeting of Stockholders to be held on June 18, 1997 (collectively, the
"Disclosure Documents"). As of their respective dates, the Disclosure Documents
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, and
the rules and regulations of the Securities and Exchange Commission (the "SEC")
thereunder applicable to such Disclosure Documents and none of the Disclosure
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading. Except to the extent information contained in
any Disclosure Document has been revised or superseded by a later-filed
Disclosure Document, none of the Disclosure Documents contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The financial
statements of the Company included in the Disclosure Documents comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be permitted by
the rules of the SEC) and fairly present the financial position of the Company
as at the dates thereof and the results of its operations and cash flows for the
periods then ended.
2.6 Nasdaq Compliance. Upon execution and fulfillment of this Agreement,
the Company shall have satisfied all conditions necessary to be in compliance
with the criteria for continued inclusion in the Nasdaq National Market System.
From and after the date hereof, the Company shall use its best efforts to cause
its continued inclusion in the Nasdaq National Market System.
3. REPRESENTATIONS OF BUYER. Buyer hereby represents and warrants to the
Company as follows:
(a) Buyer is aware that my investment involves a substantial degree of
risk, including, but not limited to the following: (i) subject to Section 2.6,
the Company's Common Stock may by removed from the Nasdaq National Market System
since the Company at March 31, 1997 was not in compliance
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with the requirements for continued inclusion as a result of not meeting the
tangible net asset requirement of Four Million Dollars ($4,000,000);(ii) the
Company has had substantial operating losses for the fiscal year ended December
31, 1996 and for the fiscal quarter ended March 31, 1997 and expects to continue
to incur losses in the future; (iii) the Company has experienced and will
continue to experience substantial fluctuations in its operating income (loss)
from quarter to quarter and year to year; (iv) the Company may need additional
financing in the future to fund operating losses; (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; (vi) the Company's
success will to a significant extent rely upon the continued services and
abilities of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. Buyer acknowledge and is aware that there is no
assurance as to the future performance of the Company.
(b) 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 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), 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 wit such usual and customary representations in connection
therewith as the Company may reasonably request.
(c) 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.
(d) Buyer or Buyer's representative 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.
(e) Buyer is an "accredited investor" as defined in Section 2(15) of the
Securities Act and in Rule 501 promulgated thereunder.
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(f) 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.
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
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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
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 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
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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 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
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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. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Attn:▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to the Buyer: with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇ Bass Successor Trust ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
c/o ▇. ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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. ▇▇▇▇▇▇▇▇ ▇▇▇▇ BASS SUCCESSOR TRUST
BY: Panther City Production Company, Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ BY: /s/ ▇.▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
Chief Executive Officer President
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