Exhibit 10.11
INVESTMENT AGREEMENT
THIS AGREEMENT is made as of April ___, 1999 between XXXXXX BLACK
INTERNATIONAL, LTD., a Delaware corporation with offices at 000 Xxxxxxxxx Xxxxx,
Xxxxxxxxx, Xxx Xxxx 00000 ("HBI") and MARKET FACTS, INC., a Delaware corporation
with offices at 0000 Xxxx Xxxx Xxxxx Xxxx, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
("MFI").
The parties agree as follows:
ARTICLE 1 -DEFINITIONS
1.1 Definitions. The following capitalized terms shall have the following
meanings:
"Affiliate" of any particular Person means any other Person controlling,
controlled by or under common control with such particular Person, where
"control" means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through the ownership of voting
securities, contract, or otherwise.
"Common Shares" shall mean the common stock, $0.01 par value per share, of
HBI.
"Holder" shall have the meaning given in Section 5.4 of this Agreement.
"Offered Shares" shall have the meaning given in Section 5.4 of this
Agreement.
"Person" shall mean any individual, corporation, company, partnership,
limited liability company, joint venture, trust, or other entity of any kind or
nature.
"Preferred Stock" shall mean the preferred stock, $0.01 per share, of HBI.
"Public Offering" means the sale of an underwritten public offering
registered under the Securities Act of Common Shares.
"Restricted Securities" means (i) the Shares, and (ii) any securities
issued with respect to the Shares by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation, or other reorganization. As to any Restricted Securities, such
securities shall cease to be Restricted Securities when they have been (a)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them, (b) distributed to the public
through a broker, dealer, or market maker pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act or become eligible for sale
pursuant to Rule 144(k) (or any similar provision then in force) under the
Securities Act, or (c) otherwise transferred and new certificates for them not
bearing the Securities Act legend set forth in Section 5.5 hereof have been
delivered by HBI in accordance with Section 5.2.
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"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as in effect on
the date hereof and as hereafter amended.
"Shares" shall have the meaning given in Section 2.1 of this Agreement.
"Strategic Agreement" shall mean the Strategic Alliance Agreement dated on
even date herewith between HBI and MFI, together with all extensions,
modifications, and replacements thereto.
"Transfer" shall have the meaning given in Section 5.3 of this Agreement.
"Transfer Notice" shall have the meaning given in Section 5.4 of this
Agreement.
ARTICLE 2 - PURCHASE OF SHARES
2.1 Share Purchase. On the date of this Agreement, HBI shall sell to MFI,
and MFI shall purchase, 38,611 Common Shares, being four (4%) of the Common
Shares on a fully diluted basis after the purchase (the "Shares"). The aggregate
purchase price for the Shares shall be Four Million One Hundred Twenty-Three
Thousand Dollars ($4,123,000). On the date of this Agreement MFI shall pay such
purchase price by wire transfer or in other immediately available funds to HBI,
and HBI shall deliver certificates evidencing the Shares to MFI.
ARTICLE 3 - REPRESENTATIONS OF MFI
As a material inducement to HBI to enter into this Agreement and sell the
Shares hereunder, MFI represents and warrants to HBI as follows:
3.1 Organization, Corporate Power. MFI is a corporation duly organized,
validly existing, and in good standing under the laws of Delaware. MFI possesses
all requisite corporate power and authority to carry out the transactions
contemplated by this Agreement.
3.2 Authorization. The execution and delivery of this Agreement, and
performance of the transactions contemplated hereby, by MFI has been duly
authorized by MFI. This Agreement constitutes a valid and binding obligation of
MFI, enforceable in accordance with its terms, subject to limitations imposed by
bankruptcy, insolvency, reorganization, or other laws or judicial decisions or
principles of equity relating to or affecting the enforcement of creditor's
rights generally. The execution and delivery by MFI of this Agreement, and the
compliance with its terms by MFI, do not (a) conflict with or result in a
violation of, (b) constitute a default under, or (c) require any authorization,
consent, approval, exemption, or other action by or notice to, or filing with,
any court or administrative or governmental body or agency pursuant to, (i) the
certificate of incorporation or
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bylaws of MFI, (ii) any law, statute, rule, or regulation to which MFI is
subject, or (iii) any material agreement, instrument, order, judgment, or decree
to which MFI is subject.
3.3 Disclosure. The Shares are being acquired for the MFI's own account,
for investment and not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act or the securities
laws of any other state applicable to MFI. MFI understands that the Shares have
not been registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act pursuant to Section 4 (2) thereof, which exemption depends
upon, among other things, the bona fide nature of MFI's investment intent
expressed herein, that HBI has no present intention of registering the Shares,
and that the Shares must be held by MFI indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or is exempt from
registration.
3.4 Access to Information. During the negotiation of the transactions
contemplated by this Agreement, MFI and its representatives have been afforded
full and free access to corporate books, documents, and other information
concerning HBI and to its offices and facilities, have been afforded an
opportunity to ask such questions of HBI and its officers, employees, agents,
accountants, and representatives concerning HBI's business, operations,
financial condition, assets, liabilities, and other relevant matters as they
have deemed necessary or desirable, and have been given all such information as
has been requested, in order to evaluate the merits and risks of the prospective
investments contemplated herein.
3.5 Due Diligence. MFI and its representatives have been solely
responsible for MFI's own "due diligence" investigation of HBI and its
management and business, for its own analysis of the merits and risks of this
investment, and for its own analysis of the fairness and desirability of the
terms of the investment. In taking any action or performing any role relative to
the arranging of the proposed investment, MFI has acted solely in its own
interest, and neither MFI (nor any of MFI's agents or employees) has acted as an
agent of HBI. MFI has such knowledge and experience in financial and business
matters that MFI is capable of evaluating the merits and risks of the purchase
of the Shares pursuant to the terms of this Agreement and of protecting MFI's
interests in connection therewith. Nothing in this Section 3.5, however, shall
affect HBI's obligations to MFI under the representations and warranties
contained in Article 4 hereof.
3.6 Economic Risk. MFI is able to bear the economic risk of the purchase
of the Shares pursuant to the terms of this Agreement, including a complete loss
of MFI's investment in the Shares.
ARTICLE 4 - REPRESENTATIONS OF HBI
As a material inducement to MFI to enter into this Agreement and purchase
the Shares hereunder, HBI represents and warrants to MFI as follows:
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4.1 Organization, Corporate Power. HBI is a corporation duly organized,
validly existing, and in good standing under the laws of Delaware. HBI possesses
all requisite corporate power and authority to carry out its business as now
conducted and to carry out the transactions contemplated by this Agreement. The
copies of HBI's charter documents and bylaws which have been previously
furnished to MFI reflect all amendments made thereto at any time prior to the
date of this Agreement and are correct and complete.
4.2 Authorization. The execution and delivery of this Agreement, and
performance of the transactions contemplated hereby, by HBI has been duly
authorized by HBI. This Agreement constitutes a valid and binding obligation of
HBI, enforceable in accordance with its terms, subject to limitations imposed by
bankruptcy, insolvency, reorganization, or other laws or judicial decisions or
principles of equity relating to or affecting the enforcement of creditor's
rights generally. The execution and delivery by HBI of this Agreement, and the
compliance with its terms by HBI, do not (a) conflict with or result in a
violation of, (b) constitute a default under, or (c) require any authorization,
consent, approval, exemption, or other action by or notice to, or filing with,
any court or administrative or governmental body or agency pursuant to, (i) the
certificate of incorporation or bylaws of HBI, (ii) any law, statute, rule, or
regulation to which HBI is subject, or (iii) any material agreement, instrument,
order, judgment, or decree to which HBI is subject.
4.3 Capital Stock and Related Matters. As of the date of this Agreement
and immediately thereafter, the authorized capital stock of HBI shall consist of
(a) 147,000 shares of Preferred Stock, all of which is issued and outstanding,
and (b) 1,000,000 shares of Common Stock, 339,738 of which shall be issued and
outstanding (before giving effect to the purchase of the Shares), 416,903 of
which shall be reserved for issuance upon conversion of the Preferred Stock,
140,520 of which shall be reserved for issuance upon exercise of outstanding
options and warrants, and 29,500 of which shall be reserved for future options
to be issued. Except as aforesaid, as of the date of this Agreement, HBI shall
not have outstanding any stock or securities convertible or exchangeable for any
shares of its capital stock or containing any profit participation features, nor
shall it have outstanding any rights or options to subscribe for or to purchase
its capital stock or any stock or securities convertible into or exchangeable
for its capital stock. As of the date of this Agreement, all of the outstanding
shares of HBI's capital stock shall be validly issued, fully paid, and
nonassessable. There are no statutory or contractual stockholder's preemptive
rights or rights of first refusal, in either case granted by HBI, with respect
to issuance of the Shares which have not been effectively waived in writing. HBI
has not violated any applicable federal or state securities laws in connection
with the offer, sale, or issuance of the Shares, and assuming the accuracy of
the representations and warranties of MFI set forth in Article 3 hereof, the
offer, sale, and issuance of the Shares hereunder do not require registration
under the Securities Act or any applicable state securities laws.
4.4 Financial Statements. HBI has delivered to MFI true and correct copies
of the following financial statements: (i) the audited consolidated balance
sheet of HBI and its subsidiaries as of June 30, 1998, and the related
statements of income and cash flows for the twelve-month period then ended, and
(ii) the unaudited consolidated balance sheet of HBI and its subsidiaries as of
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February 28, 1999 and the related statement of income for the eight (8) month
period then ended (the "Interim Statements").
Each of such financial statements (including in all cases the notes
thereto, if any) is accurate and complete in all material respects, is
consistent with the books and records of HBI, and presents fairly the
consolidated financial condition, results or operations, and cash flows of HBI
and its subsidiaries in accordance with generally accepted accounting principles
(except that the Interim Statements are subject to year end adjustments and
addition of footnotes), applied on a consistent basis as of the dates and for
the periods set forth therein.
4.5 Validity of Shares. The Shares issued to MFI pursuant to Section 2.1
of this Agreement, when issued in accordance with this Agreement, shall be
validly issued, fully paid, and nonassessable.
ARTICLE 5 - RESTRICTIONS ON TRANSFERS
5.1 Restricted Securities. The Restricted Securities are transferable only
pursuant to (a) a Public Offering, (b) Rule 144 or Rule 144A of the SEC (or any
similar rule or rules then in force) if any such rule is available, or (c)
subject to the conditions specified in Section 5.2 below, any other legally
available means of transfer.
5.2 Opinion Delivery. In connection with the transfer of any of the
Restricted Securities (other than a transfer described in Section 5.1(a) or (b)
above), MFI shall deliver written notice to HBI describing in reasonable detail
the transfer or proposed transfer, together with an opinion of legal counsel
which (to HBI's reasonable satisfaction) is knowledgeable in securities law
matters to the effect that such transfer of the Restricted Securities may be
effected without registration of such Restricted Securities under the Securities
Act. In addition, if the holder of the Restricted Securities delivers to HBI an
opinion of such counsel that no subsequent transfer of such Restricted
Securities shall require registration under the Securities Act, HBI shall
promptly upon such contemplated transfer deliver new certificates for such
Restricted Securities which do not bear the Securities Act legend set forth in
Section 5.5. If HBI is not required to deliver new certificates for such
Restricted Securities not bearing such legend, MFI, or if applicable a
subsequent transferee thereof, shall not transfer the same until the prospective
transferee has confirmed to HBI in writing its agreement to be bound by the
conditions contained in this Article 5.
5.3 Restrictions on Transfer. MFI shall not sell, transfer, assign,
pledge, or otherwise dispose of (whether with or without consideration and
whether voluntarily or involuntarily or by operation of law) the Shares or any
interest therein to any Person (a "Transfer"):
(a) for a period of three (3) years after the date of this
Agreement, or, if earlier, for a period ending on the date of termination
of the Strategic Alliance Agreement by MFI due to a breach thereof by HBI
or the date of termination of the Strategic Alliance Agreement by mutual
agreement of the parties,
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(b) after a period of three (3) years, except in compliance with
Section 5.4 of this Agreement, and
(c) at any time to any Person who is a direct competitor of HBI
and/or its Affiliates anywhere in the world.
Notwithstanding the foregoing, MFI may make a Transfer at any time:
(d) to any Person who is an Affiliate of MFI,
(e) as part of a sale of shares to the public pursuant to an
offering registered under the Securities Act, or
(f) to any Person who is simultaneously purchasing substantially all
of the Common Shares.
5.4 Right of First Offer. If MFI proposes to Transfer all or part of the
Shares pursuant to Section 5.3(b) of this Agreement, MFI shall deliver a written
notice ("Transfer Notice") to HBI. HBI promptly shall provide a copy of such
notice to any holder of at least ten percent (10)%) of the outstanding shares of
HBI on a fully diluted basis ("Holder"). The Transfer Notice shall describe the
number of Shares proposed to be transferred (the "Offered Shares") and the
proposed price per share. HBI first, or if HBI fails to do so the Holders, may
elect to purchase all, but not less than all, of the Offered Shares at the price
described in the Transfer Notice. If HBI elects to purchase all of the Offered
Shares, HBI shall give MFI and the Holders written notice of such election no
later than twenty-one (21) days after delivery of the Transfer Notice. If HBI
has not given such an election notice, any Holder may give MFI written notice of
its election to do so no later than thirty-five (35) days after delivery of the
Transfer Notice to HBI. If more than one Holder has given such an election
notice, the electing Holders' rights to purchase shall be proportionate with
their respective ownership of HBI Common Shares on a fully diluted basis. If an
election to purchase all of the Offered Shares has been made, the Offered Shares
shall be transferred to HBI (or, if applicable, the Holder) at the price stated
in the Transfer Notice no later than fourteen (14) days after notice of the
election to purchase has been given. If neither HBI nor any Holder collectively
has elected to purchase all of the Offered Shares, MFI may conclude a Transfer
at the price per share stated in the Transfer Notice, or at a higher price per
share, at any time within a one hundred twenty (120) day period after expiration
of such election periods provided that the transferee has agreed in writing to
be bound by the terms of this Article 5 as if it was an original signatory to
this Agreement.
5.5 Legend.
(a) Each certificate or instrument representing the Shares shall be
imprinted with a legend in substantially the following form:
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"The securities represented hereby have not been registered under
the Securities Act of 1933, as amended. The transfer of the
securities represented by this certificate is subject to the
conditions specified in the Investment Agreement, dated as of April
___, 1999, as amended and modified from time to time, between the
issuer (the "Company") and Market Facts, Inc., as amended and
modified from time to time. A copy of such Agreement will be
furnished by the Company to the holder hereof upon written request
and without charge."
(b) Upon the later of (i) the termination of this Agreement pursuant
to Section 7.1 hereof, and (ii) such time as the Shares are no longer Restricted
Securities, at MFI's request, HBI shall remove the legend set forth in Section
5.5(a) above from the certificates for the Shares.
5.6 Lock-Up Agreement. In connection with an initial Public Offering of
Common Shares, at the request of the underwriters for such offering, MFI agrees
to enter into an agreement in customary form not to effect any sale or other
transfer of any of the Shares then owned by it for a period of up to ninety (90)
days after the date of the prospectus relating to such initial Public Offering.
ARTICLE 6 -FINANCIAL INFORMATION
6.1 Delivery of Financial Information. HBI shall make such financial and
other information, as it makes available to the holders of all of its common
shares, available to MFI. In addition, HBI shall provide MFI with copies of its
annual audited consolidated financial statements within ninety (90) days after
the end of its fiscal year and its unaudited quarterly financial statements
within forty-five (45) days after the end of each calendar quarter.
6.2 Confidentiality. Except as otherwise required by law, or provided that
HBI is given prior notice, as required by judicial order or decree or by any
governmental agency or authority, MFI and its Affiliates shall maintain the
confidentiality of the financial statements and other information provided to it
pursuant to Section 6.1 above, provided that MFI may disclose such information
in connection with a sale or transfer of the Shares if such Person agrees to
maintain the confidentiality of such financial statements and other information
as provided in this Section 6.2.
ARTICLE 7 - TERMINATION
7.1 Termination. This Agreement, including, without limitation, the
provisions of Sections 5.3, 5.4, and Article 6 hereof, shall terminate as of the
consummation of a Public Offering of Common Shares, provided that any such
termination shall not affect the rights of the parties with respect to the
period prior to termination of this Agreement. Notwithstanding the above, the
provisions of Sections 5.1, 5.2, and 5.5 shall survive the termination of this
Agreement in accordance with their terms.
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ARTICLE 8 - MISCELLANEOUS
8.1 Successor/Assigns. This Agreement shall inure to the benefit of, and
shall be binding upon, the respective successors, legal representatives, and
assigns of the parties, provided, however, that this Section 8.1 is not intended
to supersede any restrictions on transfer of any interest expressly provided
elsewhere in this Agreement.
8.2. Governing Law. This Agreement shall be construed according to, and
governed by, the internal laws of the State of New York without reference to
principles of conflicts of laws.
8.3 Arbitration.
(a) The parties agree to this Section 8.3 as the exclusive manner and
means for resolution of all disputes of any kind or nature between them related
to this Agreement and/or the transactions contemplated hereby.
(b) Any dispute shall be settled by final and binding arbitration by a
panel of three arbitrators sitting in Rochester, New York, in accordance with
the rules of the American Arbitration Association. The arbitrators shall
promptly obtain such information regarding the matter as they deem necessary and
shall decide the matter and render a written decision which shall be delivered
to the parties. Each party shall pay the party's own fees and expenses in
connection with any arbitration proceedings, except that the parties shall
equally bear the fees and out-of-pocket expenses of the arbitrators. Any
decision shall be a final and non-appealable determination of the matter, shall
be binding upon each of the parties, and shall be enforceable by the courts of
the State of New York (Seventh Judicial District) and the courts of the United
States (Western District of New York).
8.4 Entire Agreement. This Agreement contains the entire agreement of the
parties and supersedes all prior communications and agreements related to the
subject matter hereof. Any modification, supplement, or amendment to this
Agreement must be in writing signed by both of the parties.
8.5 Notices. Any notice or demand upon any party hereto shall be deemed to
have been sufficiently given or served for all purposes hereof when delivered in
person or by nationally recognized overnight courier with receipt requested, or
three business days after it is mailed certified mail postage prepaid, return
receipt requested, addressed to the address shown in the preamble to this
Agreement or to such other address as may be designated by any party by notice
given to the other in the manner described in this Section 8.5.
8.6 Severability/Construction. If any provision of this Agreement is held
to be invalid or unenforceable for any reason, the remaining provisions will
continue in full force without being impaired or invalidated. The parties
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agree to replace any invalid provision with a valid provision which most closely
approximates the intent and economic effect of the invalid provision. The
parties agree that this Agreement has been prepared in cooperation, and that it
shall not be construed as against any particular party as drafter.
8.7 Expenses. Except as otherwise expressly provided herein, both parties
shall be responsible for their own costs and expenses in connection herewith.
8.8 No Brokers. Each party represents and warrants to the other that it
has not involved any brokers or finders in connection with this Agreement or the
transactions contemplated hereby, and agrees to indemnify the other for any
breach of this Section 8.8 by it.
8.9 Waiver. The waiver by either party of a breach of any provision of the
Agreement will not operate or be interpreted as a waiver of any other or
subsequent breach.
8.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
shall be taken together and deemed to be one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.
XXXXXX BLACK INTERNATIONAL, LTD.
By: /s/ Xxxxxx X. Black
-----------------------------
Xxxxxx X. Black
Chief Executive Officer
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MARKET FACTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxx
Executive Vice President
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INVESTMENT AGREEMENT ADDENDUM
THIS INVESTMENT AGREEMENT ADDENDUM is made as of September 10, 1999
between XXXXXX INTERACTIVE, INC. (formerly known as Xxxxxx Black International,
Ltd., a Delaware corporation with offices at 000 Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxx
Xxxx 00000 ("HI") and MARKET FACTS, INC., a Delaware corporation with offices at
0000 Xxxx Xxxx Xxxxx Xxxx, xxxxxxxx Xxxxxxx, Xxxxxxxx 00000 ("MFI").
WHEREAS, HI and MFI are parties to an Investment Agreement dated April 23,
1999 (the Agreement"), and
WHEREAS, HI has discovered an error in the representations as to
capitalization made in Section 4.3 of the Agreement, which resulted in MFI
receiving 424 fewer common shares than it should have received under the
Agreement, and
WHEREAS, the parties desire to correct the error and cause MFI to receive
the full benefit of its original bargain,
NOW THEREFORE, the parties agree as follows:
1. The first sentence of Section 4.3 of the Agreement should have read,
and is deemed revised to read, as follows:
As of the date of this Agreement and immediately thereafter, the
authorized capital stock of HBI shall consist of (a) 147,000 shares
of Preferred Stock, all of which is issued and outstanding, and (b)
1,000,000 shares of Common Stock, 345,738 of which shall be issued
and outstanding (before giving effect to the purchase of the
Shares), 421,083 of which shall be reserved for issuance upon
conversion of the Preferred Stock, 140,520 of which shall be
reserved for issuance upon exercise of outstanding options and
warrants, and 29,500 of which shall be reserved for future options
to be issued.
2. The first sentence of Section 2.1 of the Agreement should have provided
for MFI to eceive 424 additional common shares (the "Additional Shares") as part
of its purchase, and is deemed revised to read, as follows:
On the date of this Agreement, HBI shall sell to MFI, and MFI shall
purchase, 39,035 Common Shares, being four (4%) of the Common Shares
on a fully diluted basis after the purchase (the "Shares").
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3. All representations, warranties, restrictions, and other terms and
conditions of the Agreement remain in full force and effect and shall apply to
the Additional Shares in the same manner as they apply to the Shares referenced
in the Agreement.
4. Promptly after the execution of this Agreement, HI shall issue the
Additional Shares to MFI effective as of April 23, 1999 and deliver a
certificate for such shares to MFI.
5. This Addendum may be executed in one or more counterparts, each of
which shall be deemed to be an original and all of which shall be taken together
and deemed to be one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.
XXXXXX INTERACTIVE, INC.
By: /s/ Xxxxxx X. Black
-----------------------------
Title: Chief Executive Officer
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MARKET FACTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: Executive Vice President
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