[EXECUTION COPY]
AMENDED AND RESTATED
DEBENTURE PURCHASE AGREEMENT
(12% SENIOR SECURED CONVERTIBLE DEBENTURES)
THIS AMENDED AND RESTATED DEBENTURE PURCHASE AGREEMENT (this
"Agreement") is made and entered into as of December 27, 1999 by and among
SECURITY CONNECTICUT LIFE INSURANCE COMPANY, a Connecticut corporation
("Security Connecticut"), PROTECTIVE LIFE INSURANCE COMPANY, a Tennessee
corporation ("Protective"), NORTH AMERICAN COMPANY FOR LIFE AND HEALTH
INSURANCE, an Illinois corporation ("North American", and together with
Security Connecticut and Protective, collectively, the "Purchasers" and
individually, a "Purchaser"), and SELECTQUOTE INC., a Delaware corporation
("SelectQuote").
RECITALS
WHEREAS, Purchasers, have heretofore purchased from SelectTech, a
Nevada corporation ("SelectTech"), 12% Senior Secured Convertible Debentures
(the "Debentures") in the aggregate principal amount of Two Million Five
Hundred Thousand Dollars ($2,500,000), pursuant to that certain Debenture
Purchase Agreement between the Purchasers, Protective and SelectTech, dated
October 15, 1998 (the "Debenture Purchase Agreement"); and
WHEREAS, each of Security Connecticut and North American hold
Debentures with an outstanding principal balance of $950,000, and Protective
holds Debentures with an Outstanding principal balance of $600,000, or
$2,500,000 in the aggregate; and .
WHEREAS, pursuant to the terms and conditions of that certain
Amended and Restated Agreement and Restated Plan of Reorganization (the "Plan
of Reorganization"), by and among SelectQuote Insurance Services, a
California corporation ("SQIS"), SelectTech, SelectQuote, and SelectQuote
Acquisition Sub, a California corporation and wholly owned subsidiary of
SelectQuote ("Sub"), SelectTech has merged with and into SQIS, with SQIS
assuming, by operation of law, the obligations of SelectTech with respect to
the Debentures and the other documents and agreements delivered in connection
therewith (the "Debenture Documents"); and
WHEREAS, pursuant to the terms and conditions of the Plan of
Reorganization, Sub has merged with and into SQIS, with the result being that
SQIS is now a wholly owned subsidiary of SelectQuote; and
WHEREAS, pursuant to the terms and conditions of the Plan of
Reorganization, the obligations of SQIS with respect to the Debentures and
the Debenture Documents have been assigned to, and assumed by, SelectQuote;
and
WHEREAS, SelectQuote and Purchasers have agreed to amend and restate
the Debenture Purchase Agreement as set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and of
the mutual covenants, agreements, undertakings, representations and
warranties contained herein, each of the Purchasers and SelectQuote hereby
agree to amend and restate the Debenture Purchase Agreement in its entirety
as follows:
ARTICLE 1
RULES OF CONSTRUCTION; DEFINITIONS
SECTION 1.1 RULES OF CONSTRUCTION. For all purposes of this
Agreement, except as otherwise expressly provided herein:
(a) The terms defined in this Article, whenever used in this
Agreement (including in the Schedules), shall have the respective meanings
indicated below for all purposes of this Agreement. Singular terms shall
include the plural, as well as the singular, and vice versa.
(b) All accounting terms not otherwise defined in this Article have
the meaning assigned to them, and all computations herein provided for shall
be made, in accordance with generally accepted accounting principles. All
references to generally accepted accounting principles refer to such
principles as they exist at the date thereof.
(c) All references herein to a Section, Article or Schedule are to a
Section, Article or Schedule of or to this Agreement, unless otherwise
indicated.
(d) The terms "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
article, section or other subdivision.
SECTION 1.2 DEFINITIONS . The following terms shall have the
following meanings for all purposes of this Agreement:
AFFILIATE: of a Person means a Person that directly or through one
or more intermediaries controls, is controlled by or is under common control
with, the first Person. "Control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, by contract or
credit arrangement, by trustee or executor, or otherwise.
APPLICABLE LAW: all applicable provisions of all (i) constitutions,
treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Body, (ii) Governmental
Approvals and (iii) orders, decisions, injunctions, judgments, awards and
decrees of or agreements with any Governmental Body.
AUTHORIZED REPRESENTATIVE: with respect to SelectQuote, its
President, or such other officer of SelectQuote as may be designated in
writing to each of the Purchasers by the Board of Directors of SelectQuote.
COMMON STOCK: the common stock, $.01 par value, of SelectQuote.
CONSENT: any consent, approval, authorization, waiver, permit,
grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice
to, any Person, including but not limited to any Governmental Body.
CONTRACT: any agreement, contract, obligation, promise or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
CONVERSION PRICE: as defined in SECTION 7.1.
CONVERTIBLE SECURITIES: as defined in SECTION 9.1.
CORPORATE TRANSACTION: (a) sale, transfer or disposition of all or
substantially all of SelectQuote's properties or assets; (b) a merger or
consolidation in which SelectQuote is not the surviving entity, except for a
transaction the principal purpose of which is to change the state of
SelectQuote's incorporation; or (c) any reverse merger in which SelectQuote
is the surviving entity and in which securities possessing more than fifty
percent (50%) of the total combined voting power of SelectQuote's outstanding
securities are transferred to a holder or holders different from those who
held such securities immediately prior to such merger.
DEBENTURES: as defined in the Recitals of this Agreement.
DEBENTURE BALANCE: as defined in SECTION 2.1.
EVENT: as defined in SECTION 7.5.
EVENT NOTICE: as defined in SECTION 7.5.
EVENT OF DEFAULT or EVENTS OF DEFAULT: as defined in SECTION 5.1.
FINANCIAL STATEMENTS: as defined in SECTION 3.3.
GAAP: generally accepted accounting principles as in effect in the
United States.
GOVERNMENTAL APPROVAL: any Consent of, with or to any Governmental
Body.
GOVERNMENTAL BODY: any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, including without limitation any governmental authority, agency,
department, board, commission or instrumentality of the United States, any
State of the United States or any political subdivision thereof, and any
tribunal or arbitrator(s) of competent jurisdiction, and any self-regulatory
organization.
INITIAL OFFERING: as defined in SECTION 6.2.
KEY EMPLOYEES: shall include Xxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxx
Xxxxxxx and Xxxx Xxxxxx.
Knowledge or knowledge: an individual will be deemed to have
knowledge of a particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact
or other matter; PROVIDED, HOWEVER, such reasonably comprehensive
investigation shall not require a patent search.
A Person (other than an individual) will be deemed to have Knowledge
of a particular fact or other matter if any individual who is serving, or who
has at any time served, as a director, officer, partner, executor or trustee
of such Persons (or in any similar capacity) has, or at any time had,
Knowledge of such fact or other matter.
LIEN: any mortgage, pledge, hypothecation, right of others, claim,
security interest, encumbrance, lease, sublease, license, occupancy
agreement, adverse claim or interest, easement, covenant, encroachment,
burden, title defect, title retention agreement, voting trust agreement,
interest, equity, option, lien, right of first refusal, charge or other
restrictions or limitations of any nature whatsoever, including but not
limited to such as may arise under any Contracts.
MAJORITY-IN-INTEREST OF PURCHASERS: the Purchasers holding a
majority-in-interest of the value of the outstanding Debenture Balances.
MATURITY DATE: as defined in SECTION 2.1.
NOTICE OF CONVERSION: as defined in Section 7.2.
PERSON: any natural person, firm, partnership, association,
corporation, company, trust, business trust, Governmental Body or other
entity.
PLEDGE AGREEMENT: as defined in SECTION 2.2.
REGISTRABLE SECURITIES: all shares of Common Stock or shares of
Common Stock issuable upon conversion of convertible securities held by
Purchasers from time to time.
REGISTRATION NOTICE: as defined in SECTION 7.2.
REGISTRATION STATEMENT: shall mean any registration statement under
the Securities Act which covers Common Stock, including the Prospectus,
amendments and supplements to such Registration Statement post-effective
amendments, and all exhibits and all material incorporated by reference in
such Registration Statement.
RESTRICTED STOCK: as defined in SECTION 8.1.
SALE NOTICE: as defined in SECTION 9.1.
SEC: the Securities and Exchange Commission.
SECURITIES: as defined in SECTION 4.3.
SECURITIES ACT: the Securities Act of 1933, as amended.
SELLING STOCKHOLDER: as defined in SECTION 9.1.
SUBSIDIARY: with respect to SelectQuote, any corporation or other
Person of which securities or other interests are held by SelectQuote or one
or more of its Subsidiaries, which securities or other interests (a) provide
SelectQuote sufficient power to elect a majority of that corporation's or
other Person's board of directors or similar governing body, or (b) otherwise
provide SelectQuote sufficient power to direct the business and policies of
that corporation or other Person (other than securities or other interests
having such power only upon the happening of a contingency that has not
occurred).
TAKE-ALONG NOTICE: as defined in SECTION 9.1.
TAX: any federal, state, provincial, local, foreign or other income,
alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits,
gross receipts, value added, sales, use, goods and services, excise, customs,
duties, transfer, conveyance, mortgage, registration, stamp, documentary,
recording, premium, severance, environmental (including taxes under Section
59A of the Code), real property, personal property, ad valorem, intangibles,
rent, occupancy, license, occupational, employment, unemployment, insurance,
social security, disability, workers' compensation, payroll, health care,
withholding, estimated or other similar tax, duty or other governmental
charge or assessment or deficiencies thereof (including all interest and
penalties thereon and additions thereto whether disputed or not).
ARTICLE 2
DEBENTURES
SECTION 2.1 INTEREST ON DEBENTURES; CONVERSION; REPAYMENT .
(a) Interest on the outstanding principal balance of the Debentures
and all accrued and unpaid interest thereon shall accrue from the original
issue date at a rate of twelve percent (12%) per annum until payment in full
of all amounts due under the Debentures.
(b) From and after the date hereof and continuing so long as any of
the Debentures remain outstanding, each Purchaser shall have the right, in
its sole discretion, to convert any or all of the outstanding Debentures
owned by it into shares of Common Stock in accordance with the provisions of
ARTICLE 7 hereof.
(c) Subject to each Purchaser's conversion rights set forth in
SECTION 2.1(b) above, the outstanding principal balance of the Debentures,
all accrued and unpaid interest thereon and any other fees or charges with
respect thereto (collectively, the "Debenture Balance"), shall be repaid to
Purchasers in twenty (20) consecutive quarterly installments, payable in
arrears on the last day of each December, March, June and September in each
year, beginning on December 31, 1998,1 and continuing to and including
September 30, 2003 (the "Maturity Date") as follows:
(i) payments for the first eight (8) quarterly installments,
beginning December 31, 1998 and continuing to and including September
30, 2000, shall be interest only; and
(ii) payments for the remaining twelve (12) quarterly
installments shall include principal and interest, as follows:
(A) principal shall be payable in eleven (11)
consecutive quarterly principal installments in an amount
equal to the Debenture Balance as of October 1, 2000 divided
by twelve (12), plus
(B) interest on the outstanding Debenture Balance,
beginning December 31, 2000 and continuing to and including
the Maturity Date.
The last installment shall be in the amount of the entire Debenture
Balance then remaining unpaid, and shall be due and payable on the
Maturity Date.
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1 SelectTech has made each quarterly payment due on the outstanding
Debentures held by the Purchasers through September 30, 1999, with the next
quarterly payment date being December 31, 1999.
(iii) Three (3) business days prior to the date of any payment
due pursuant to this Section 2.1, SelectQuote shall transmit a
facsimile to each Purchaser setting forth the amount of principal and
interest, including the computations related thereto, to be included in
such payments.
SECTION 2.2 SECURITY AGREEMENT. As security for the full and prompt
payment when due of each and every liability of SelectQuote to pay amounts
owed under the Debentures and the fulfillment of all other obligations of
SelectQuote to Purchasers under this Agreement, SelectQuote shall cause SQIS
to affirm the Security Agreement between SelectTech and the Purchasers dated
October 15, 1998 (the "Security Agreement") and hereby agrees that it shall
be collateralized by all of the assets of SQIS, subject to the Purchasers
agreement to subordinate their lien and rights to repayment to the liens and
obligations of SQIS to LaSalle Bank National Association ("LaSalle") upon
such terms and conditions as shall be mutually agreed upon by LaSalle and
Purchasers at such time as it extends a loan to SQIS.
SECTION 2.3 DELIVERIES BY SELECTQUOTE. As a condition precedent to
the effectiveness of this Agreement, SelectQuote shall deliver or cause to be
delivered to Purchaser the following documents:
(a) copies of minutes of the board of directors of
SelectQuote authorizing this Agreement and the transactions provided
for herein;
(b) duly executed replacement certificates in the Form of
EXHIBIT B attached hereto, in the name of SelectQuote evidencing the
Debentures heretofore issued to Purchasers;
(c) certified copy of SelectQuote's Articles of
Incorporation;
(d) an Officer's Certificate, duly executed by the President
of SelectQuote, certifying that (A) SelectQuote has performed
all agreements on its part required to be performed under this
Agreement, and no breaches or defaults thereunder have
occurred; (B) all representations and warranties contained in
Article 3 shall (except as affected by the transactions
provided for herein) are true on and as of the date hereof;
and (C) no Event of Default or Default shall have occurred and
be continuing.
(e) good standing certificates for SelectQuote from the
Secretary of State of Delaware; and
(f) such other instruments as may be reasonably required to
effect the purposes hereof.
SECTION 2.4 TRANSFER TAXES. All transfer taxes (if any) arising in
connection with the consummation of the transactions referred to in SECTIONS
2.1 THROUGH 2.3 above shall be paid by SelectQuote.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELECTQUOTE
SelectQuote and SQIS hereby represent and warrant to Purchasers as
follows:
SECTION 3.1 ORGANIZATION AND AUTHORITY; CAPITALIZATION.
(a) SelectQuote is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and it has all
requisite power and authority to own or hold under lease the property it
purports to own or hold under lease, to transact the business it currently
transacts and as currently proposed to be transacted, to execute and deliver
this Agreement, and to perform the provisions hereof and thereof; and
SelectQuote has all requisite power and authority to deliver the Debentures
in accordance with the provisions of this Agreement. SelectQuote is duly
qualified as a foreign corporation and is in good standing in each
jurisdiction in which the character of the properties owned or held under
lease by it or the nature of the business transacted by it requires such
qualification and where the failure to qualify as a foreign corporation would
have a material adverse impact on it.
(b) The authorized, issued and outstanding shares of capital stock
of SelectQuote are set forth on SCHEDULE 3.1(b). Except as set forth on
SCHEDULE 3.1(b), no options, warrants or other rights to purchase or
otherwise acquire any unissued shares of Common Stock are outstanding on the
date of this Agreement or will be outstanding on the date hereof. SCHEDULE
3.1(b) also contains a list of all of the stockholders of SelectQuote,
showing the number of shares owned by each such holder.
SECTION 3.2 SUBSIDIARIES. SCHEDULE 3.2 hereto sets forth a complete
list of the Subsidiaries of SelectQuote, together with a list of the
stockholders of each Subsidiary and their respective ownership interest
therein.
SECTION 3.3 FINANCIAL STATEMENTS. Attached as SCHEDULE 3.3 are
copies of SelectTech's and SQIS's unaudited balance sheets as of June 30,
1999 and the related consolidated statements of income, changes in
shareholders' equity and cash flow for the year then ended, and an interim
balance sheet as of June 30, 1999 and the related consolidated statements of
income, changes in shareholders' equity and cash flow for the three month
period beginning July 1, 1999 and ending September 30, 1999, and the balance
sheet of SelectQuote as of September 30, 1999, certified by the respective
Presidents and Chief Financial Officers of SelectTech, SQIS and SelectQuote
(the "Financial Statements"). The Financial Statements fairly present the
respective financial positions of SelectTech, SQIS and SelectQuote as of
September 30, 1999 and the results of their operations for the periods
covered by said statements of income, changes in shareholders' equity
and changes in cash flow, and have been prepared in accordance with GAAP
consistently applied throughout the periods involved. There are no material
liabilities, contingent or otherwise, of SelectTech, SQIS or SelectQuote as
of September 30, 1999 not reflected in said balance sheets as of said date.
Since September 30, 1999, there have been no changes in the assets,
liabilities or financial positions of SelectTech, SQIS or SelectQuote from
that set forth in said balance sheets as of said date, other than changes in
the ordinary course of business which have not, either individually or in the
aggregate, been materially adverse.
SECTION 3.4 COMPLIANCE WITH OTHER INSTRUMENTS. The consummation of
the transactions provided for in this Agreement and the performance of the
terms and provisions of this Agreement will not result in any breach of, or
constitute a default under, or result in the creation of any lien in respect
of any property of SelectQuote or any Subsidiary under any indenture,
mortgage, deed of trust, bank loan or credit agreement or other financing
agreement, corporate charter, by-laws or other agreement or instrument to
which SelectQuote or its Subsidiaries are a party or by which SelectQuote or
its Subsidiaries or any of their properties may be bound or affected.
SECTION 3.5 GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval
or authorization of, or registration, filing or declaration with, any
Governmental Body is required for the validity of the execution and delivery
or for the performance by SelectQuote or its Subsidiaries of any of the
transactions provided for in this Agreement, except as may be required by
state blue sky laws.
SECTION 3.6 LITIGATION; OBSERVANCE OF STATUTES, REGULATIONS AND
ORDERS. There are no actions, suits or proceedings pending or, to the
Knowledge of SelectQuote or its Subsidiaries, threatened against or affecting
SelectQuote or its Subsidiaries or any of their properties in any court or
before any arbitrator of any kind or before or by any Governmental Body.
Neither SelectQuote nor its Subsidiaries are in default under any order,
writ, injunction, decree or judgment of any court, arbitrator or Governmental
Body. To SelectQuote's Knowledge, neither SelectQuote nor its Subsidiaries
are in violation of any Applicable Law.
SECTION 3.7 NO MISLEADING INFORMATION. To the Knowledge of
SelectQuote, neither this Agreement nor any other document, certificate or
written statement furnished to Purchasers by or on behalf of SelectQuote in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading; and
there is no fact known to SelectQuote that SelectQuote has not disclosed to
Purchasers that materially adversely affects or, so far as SelectQuote can
reasonably foresee, will materially adversely affect the properties, or
financial or other condition of SelectQuote or the ability of SelectQuote to
perform its obligations hereunder and under the other documents delivered in
connection herewith. This representation does not apply to any draft
registration statements provided to the Purchasers at their request; all of
the contents of which are disclaimed by SelectQuote for purposes of this
Agreement.
ARTICLE 4COVENANTS
Unless otherwise approved in writing by a Majority-in-Interest of
the Purchasers, SelectQuote and SQIS covenant and agree that so long as any
Debentures shall be outstanding:
SECTION 4.1 PAYMENT OF PRINCIPAL AND INTEREST. SelectQuote will duly
and punctually pay the principal and interest on the Debentures in accordance
with the terms thereof and in this Agreement.
SECTION 4.2 BOOKS AND RECORDS. SelectQuote and its Subsidiaries
will keep proper books of record and account and set aside appropriate
reserves, all in accordance with GAAP.
SECTION 4.3 PAYMENT OF TAXES; CORPORATE EXISTENCE; MAINTENANCE OF
PROPERTIES; COMPLIANCE WITH LAWS. SelectQuote and each of its Subsidiaries
shall:
(a) pay and discharge or cause to be paid and discharged all Taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or upon any of its property when due, as well as all lawful
claims for labor, materials and supplies which, if unpaid, might by
Applicable Law become a Lien upon its property; PROVIDED, HOWEVER, that
SelectQuote and its Subsidiaries shall not be required to pay any such Tax,
assessment, charge, levy or claim if the amount, applicability or validity
thereof shall currently be contested in good faith by appropriate
proceedings, and if a reserve or other appropriate provision (if any), as
shall be required by GAAP, shall have been made and reflected on the
appropriate SelectQuote financial statements;
(b) do or cause to be done all things necessary to preserve and keep
in full force and effect its existence, licenses, appointments, rights and
franchises; and
(c) maintain and keep, or cause to be maintained and kept, its
properties and those of its Subsidiaries in good repair, working order and
condition, and from time to time make or cause to be made all needful and
proper repairs, renewals, replacements and improvements so that the business
carried on in connection therewith may be conducted effectively in all
material respect, at all times.
SECTION 4.4 FINANCIAL STATEMENTS AND INFORMATIONSECTION. SelectQuote
will furnish to each Purchaser:
(a) as soon as available and in any event within 60 days after the
end of each calendar quarter, copies of a consolidated balance sheet of
SelectQuote as of the end of such quarter and of the related consolidated
statements of income, stockholders' equity and changes in cash flow of
SelectQuote for the portion of the fiscal year ended with the last day of
such quarter, all in reasonable detail and stating in comparative form the
respective consolidated figures for the corresponding date and period in the
previous fiscal year and all certified by the President and
Chief Financial Officer of SelectQuote to present fairly the information
contained therein, subject to year-end and audit adjustments; and
(b) as soon as available and in any event within 60 days after the
end of each fiscal year for SelectQuote, unaudited copies of a consolidated
balance sheet of SelectQuote as of the end of such fiscal year and of the
related consolidated statements of income and stockholders' equity and
statement of changes in cash flow of SelectQuote for such fiscal year, all in
reasonable detail and stating in comparative form the respective consolidated
figures as of the end of and for the previous fiscal year; and
(c) as soon as available and in any event within 90 days after the
end of each fiscal year for SelectQuote, audited copies of a consolidated
balance sheet of SelectQuote as of the end of such fiscal year and of the
related consolidated statements of income and stockholders' equity and
statement of changes in cash flow of SelectQuote for such fiscal year, all in
reasonable detail and stating in comparative form the respective consolidated
figures as of the end of and for the previous fiscal year and all accompanied
by a report thereon of independent public accountants of recognized standing
reasonably acceptable to Purchasers; and
(d) with the financial statements submitted under Sections 5.4(a),
5.4(b) and 5.4(c), a certificate signed by the party certifying said
statement to the effect that no Event of Default, nor any event that, upon
notice or lapse of time or both, would constitute an Event of Default, exists
or, if any such Event of Default or event exists, specifying the nature and
extent thereof; and
(e) promptly upon receipt thereof, copies of all other reports,
management letters and other documents submitted to it by independent
accountants in connection with any annual or interim audit of its books made
by such accountants; subject to Purchasers agreement to hold such information
in confidence and to execute confidentiality agreements as may be reasonably
requested; and
(f) as soon as practical, from time to time, such other information
regarding its operations, business affairs and financial condition as any
Purchaser may reasonably request; subject to Purchasers agreement to hold
such information in confidence and to execute confidentiality agreements as
may be reasonably requested.
SECTION 4.5 INSPECTION OF PROPERTIES AND BOOKS. Until the later of
(i) such time as SelectQuote has discharged all obligations to Purchasers
pursuant to this Agreement, including without limitation the payment in full
of all outstanding Debentures, or (ii) such time as SelectQuote shall
successfully consummate an Initial Offering of its Common Stock, each
Purchaser shall have the right to visit and inspect any of the properties of
SelectQuote, upon reasonable notice and during regular business hours and so
long as such visits or inspections do not unduly interfere with SelectQuote's
business operations, to examine the books of account and records of
SelectQuote, to make copies and extracts therefrom, to discuss the affairs,
finances and accounts of SelectQuote with, and to be advised as to the same
by, its and their officers, and its and their independent public accountants
(whose fees and expenses arising directly from such
advice shall be paid by such Purchaser, except in such cases where such
Purchaser's inspection discloses a variance from SelectQuote's reported
results of ten percent (10%) or greater, in which case all fees and expenses
shall be paid by SelectQuote), all at such reasonable intervals as each
Purchaser may desire, subject to Purchasers agreements to hold such
information in confidence and to execute confidentiality agreements as may be
reasonably requested.
SECTION 4.6 INSURANCE. SelectQuote and its Subsidiaries will insure
and keep insured, with financially sound and reputable insurers, their
respective properties, and such insurance shall be in such amounts (and with
such deductibles), as companies engaged in a similar business in accordance
with good business practice customarily insure properties of a similar
character against loss by fire and from other causes. In addition,
SelectQuote and its Subsidiaries will maintain with financially sound and
reputable insurers public liability insurance against claims for personal
injury, death or property damage suffered by others upon or in or about any
premises occupied by it or occurring as a result of its ownership,
maintenance or operation of any automobiles, trucks or other vehicles,
aircraft or other facilities or as a result of the use of products
manufactured, constructed or sold by it or services rendered by it, in such
amounts (and with such deductibles) as such insurance is usually carried by
companies engaged in a similar business and as is in accordance with good
business practice. During the term of this Agreement, SelectQuote covenants
and agrees to maintain not less than One Million Dollars ($1,000,000) in key
man life insurance on the lives of each of the Key Employees, the sole
beneficiary of which policies shall be SelectQuote.
SECTION 4.7 TRANSACTIONS WITH AFFILIATES. Neither SelectQuote nor
any of its Subsidiaries will engage in any transaction with an Affiliate on
terms more favorable to the Affiliate than would have been obtainable in an
arms' length dealing.
SECTION 4.8 NOTICE OF DEFAULT. Immediately upon SelectQuote or any
of its Subsidiaries obtaining Knowledge of any Event of Default under this
Agreement, it shall notify Purchasers of such Event of Default.
SECTION 4.9 ISSUANCE OF STOCK; RESERVES. Except as provided in
Schedule 4.9 and the issuance of Common Stock at a price of not less than
$4.00 per share, until July 1, 2000, SelectQuote shall not authorize or issue
shares of any class of stock or any securities convertible into any class of
stock without the prior written consent of each of the Purchasers, in its
sole discretion. SelectQuote shall reserve for issuance an amount of shares
of Common Stock sufficient to satisfy the number of shares due to Purchasers
upon conversion of the Debentures.
SECTION 4.10 OTHER INDEBTEDNESS. Neither SelectQuote nor SQIS shall
create, assume, or permit to exist any indebtedness, except:
(a) The Debentures;
(b) the indebtedness described on SCHEDULE 4.10 hereto; and
(c) subordinated indebtedness to any commercial bank(s), provided
that such subordinated indebtedness shall not exceed an aggregate of One
Million Dollars ($1,000,000) at any one time outstanding on terms acceptable
to Purchasers and, provided further, that SelectQuote and SQIS and any such
lender shall have executed a Subordination Agreement in the form attached
hereto as EXHIBIT C;
(d) trade indebtedness incurred in the ordinary course of business;
and
(e) equipment lease financing.
SECTION 4.11 CONTINUATION OF CURRENT BUSINESS, OFFICES, NAME, ETC..
Neither SelectQuote nor its Subsidiaries shall (a) engage in any business
other than the business now being conducted by it and other businesses
directly related thereto; (b) remove its principal place of business or
business records from the State of California, unless the removal is pursuant
to a merger, consolidation or transfer of assets approved by the Purchasers;
(c) change its name or conduct its business in any name other than its
current name; or (d) enter into (1) any agreement whereby the management,
supervision or control of its business is delegated to or placed in any
person other than its current governing body and officers or (2) any contract
or agreement whereby any of its principal functions are delegated to or
placed in any agent or independent contractor.
SECTION 4.12 SALE OF ASSETS, CONSOLIDATION, MERGER. SelectQuote
shall not (a) sell, lease, transfer or otherwise dispose of all or a
substantial part of its properties or assets to any Person; (b) permit any of
its Subsidiaries to sell, lease, transfer or otherwise dispose of greater
than 50% of the fair value of their properties or assets to any Person; or
(c) consolidate with, merge into or participate in a statutory share exchange
with any other Person, or permit another Person to merge into it, acquire all
or substantially all the properties or assets of any other Person, or acquire
all or substantially all the properties or assets relating to a line of
business or a division of any other Person.
SECTION 4.13 LITIGATION NOTICE. SelectQuote shall immediately notify
Purchasers of any action, suit or proceeding at law or in equity or by or
before any Governmental Body that, if adversely determined, might reasonably
be expected to impair its ability to perform any of its obligations under
this Agreement or any agreement delivered in connection herewith to
Purchasers, might reasonably be expected to impair its right to carry on its
business substantially as now conducted, or might reasonably be expected to
materially and adversely affect its business, operations, properties or
condition, financial or otherwise.
SECTION 4.14 LIENSSECTION. Neither SelectQuote nor its Subsidiaries
shall incur, create, assume or permit to exist any Lien on any of its
properties, now or hereafter owned, other than:
(a) Liens securing the payment of obligations to LaSalle and to
Purchasers pursuant to this Agreement;
(b) deposits under workmen's compensation, unemployment insurance
and Social Security laws, or to secure the performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases or to
secure statutory obligations or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds in the ordinary course of
business;
(c) Liens imposed by law, such as carriers', warehousemen's or
mechanics' liens, incurred in good faith in the ordinary course of business
and that are not delinquent or that are actively being contested in good
faith by SelectQuote, and any Lien arising out of a judgment or award not
exceeding $10,000 with respect to which an appeal is being prosecuted, a stay
of execution pending such appeal having been secured; and
(d) Liens for taxes, assessments or other governmental charges or
levies that are not delinquent or that are being contested in good faith by
SelectQuote.
(e) purchase money Liens on equipment (arising substantially
contemporaneously with the purchase of such equipment) acquired in the
ordinary course of business to secure the purchase the acquisition of such
equipment or to secure indebtedness incurred solely for the purpose of
financing the acquisition of such equipment, or any Lien existing on the
equipment at the time of its acquisition, provided that (A) the indebtedness
secured by such Lien does not exceed the purchase price or fair market value,
whichever is less, or the equipment so acquired at the time of its
acquisition, (B) the equipment is used for useful in the ordinary course of
business of the acquiring person, and (C) the Lien dose not cover and
property other than the equipment so acquired; PROVIDED, HOWEVER, the
aggregate principal amount secured by Liens described in this Section 4.14(e)
shall not exceed Five Hundred Thousand Dollars ($500,000).
SECTION 4.15 GUARANTIES. Neither SelectQuote nor its Subsidiaries
shall guarantee, endorse, become surety for or otherwise in any way become or
be responsible for the indebtedness, liabilities or obligations of any other
Person, whether by agreement to purchase the indebtedness or obligations of
any other Person, or agreement for the furnishing of funds to any other
Person (directly or indirectly, through the purchase of goods, supplies or
services or by way of stock purchase, capital contribution, working capital
maintenance agreement, advance or loan) or for the purpose of paying or
discharging the indebtedness or obligations of any other Person, or
otherwise, except for the endorsement of negotiable instruments in the
ordinary course of business for collection.
SECTION 4.16 INVESTMENTS. Except for wholly-owned subsidiaries of
SelectQuote, neither SelectQuote nor its Subsidiaries shall purchase or hold
beneficially any stock, other securities or evidences of indebtedness of,
make or permit to exist any loans or advances to, or make any investment or
acquire any interest whatsoever in, any other Person; provided, however, that
they may invest in (1) direct obligations of, or obligations unconditionally
guaranteed by, the United States of America or any agency thereof maturing in
less than one year from the date of purchase; (2) commercial paper issued by
any Person organized and doing business under the laws of the United States
of America or any state thereof rated in the highest category by
Xxxxx'x Investors Services, Inc. or by Standard & Poor's Corporation and
maturing in less than one year from the date of purchase; and (3)
certificates of deposit maturing within one year of the date of acquisition
thereof issued by any commercial bank, organized and doing business under the
laws of the United States of America or any state thereof whose deposits are
insured by the Federal Deposit Insurance Corporation, if the face amount of
said certificate of deposit, when added to all other deposits of SelectQuote
or such Subsidiary at such commercial bank, does not exceed the
then-applicable limitation on the amount of federally insured deposits; and
further provided that it may hold the stock of any subsidiaries to which the
Purchasers have consented in writing.
SECTION 4.17 FURTHER ASSURANCES. SelectQuote and its Subsidiaries
shall at its expense, at any time and from time to time, promptly execute and
deliver all further instruments and documents and take all further action
that may be necessary or in accordance with good practice or that Purchasers
may reasonably request in connection with this Agreement or the other
transactions provided for herein.
ARTICLE 5
EVENTS OF DEFAULT; REMEDIES
SECTION 5.1 EVENTS OF DEFAULT DEFINED; ACCELERATION OF MATURITY. If
any of the following events (individually an "Event of Default" and
collectively "Events of Default") shall have occurred and be continuing:
(a) any two (2) Key Employees cease to be actively involved in the
day-to-day management of SelectQuote in accordance with their current level of
participation therein PROVIDED, HOWEVER, the happening of the events described
in this subsection (a) after the closing of an Initial Offering shall not
constitute an Event of Default; or
(b) any default or event of default shall occur under any document
or agreement delivered in connection with the transactions provided for in
this Agreement (after giving effect to any applicable notice, grace or cure
period specified therein); or
(c) any representation or warranty made in this Agreement shall
prove to be false or misleading in any material respect as of the time made;
or
(d) any closing certificate or financial statement furnished in
connection with this Agreement shall prove to be false or misleading in any
material respect as of the time furnished; or
(e) immediately upon a breach of Section 4.12 by SelectQuote or any
of its Subsidiaries; or
(f) default shall be made in the due observance or performance of
any material covenant, condition or agreement on the part of SelectQuote or
its Subsidiaries to be observed or performed pursuant to the terms of this
Agreement (other than any covenant, condition or agreement, default in the
observance or performance of which is elsewhere in this SECTION 5.1
specifically dealt with) or the Security Agreement and such default shall
continue unremedied for a period of thirty (30) days; or
(g) any default or event of default (including, but not limited to,
the failure to make any payment of principal or interest thereunder when due)
shall occur under the Debentures (after giving effect to any applicable
notice, grace or cure period specified therein); or
(h) any event shall occur or any condition shall exist in respect of
any debt or obligation of SelectQuote or its Subsidiaries (other than under
the Debentures), or under any agreement securing or relating to any of such
debts or obligations, the effect of which is to cause the acceleration of the
maturity of such debt or obligation, or any such debt shall not have been
paid at the final maturity date thereof (as renewed or extended if it shall
have been renewed or extended) and any applicable grace period shall have
expired; or
(i) either SelectQuote or any of its Subsidiaries shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) be generally unable to pay its debts
as such debts become due, (iii) make a general assignment for the benefit of
its creditors, (iv) commence a voluntary case under the Federal Bankruptcy
Code (as now or hereafter in effect), (v) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vi) fail to
controvert in a timely or appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under such Bankruptcy Code,
(vii) take any action under the laws of its jurisdiction of incorporation
analogous to any of the foregoing, or (viii) take any corporate action for
the purpose of effecting any of the foregoing; or
(j) with respect to SelectQuote or any of its Subsidiaries, a
proceeding or case shall be commenced, without the application or consent of
SelectQuote or such Subsidiaries in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, dissolution, winding up, or
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like for all or any substantial part
of its assets, or (iii) similar relief in respect of it, under any law
providing for the relief of debtors, and such proceeding or case shall
continue undismissed, or unstayed and in effect, for a period of sixty (60)
days; or an order for relief shall be entered in an involuntary case under
such Bankruptcy Code, against SelectQuote or any of its Subsidiaries; or
action under the laws of the jurisdiction of incorporation of SelectQuote or
any of its Subsidiaries analogous to any of the foregoing shall be taken with
respect to SelectQuote or any of its Subsidiaries and shall continue unstayed
and in effect for any period of sixty (60) consecutive days; or
(k) final judgment for the payment of money shall be rendered by a
court of competent jurisdiction against SelectQuote or any of its
Subsidiaries and SelectQuote or such Subsidiary shall not discharge the same
or provide for its discharge in accordance with its terms,
or procure a stay of execution thereof within thirty (30) days from the date
of entry thereof and within said period of thirty (30) days, or such longer
period during which execution of such judgment shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal,
and such judgment together with all other such judgments shall exceed in the
aggregate an amount equal to or greater than five percent (5%) of
SelectQuote's consolidated revenues for its previous fiscal year-end, or in
any case where such judgment together with all other such judgments may
materially adversely affect the business, prospects, financial condition or
results of operations of SelectQuote;
(l) if, at any time, SelectQuote or any of its Subsidiaries shall
fail to own sufficient title and ownership of all intellectual property
assets whereby such failure would be reasonably likely to have a material
adverse effect on the business or operations of SelectQuote or such
Subsidiary.
(m) If the Bylaws or Articles of Incorporation of SelectQuote be
altered or amended in any manner which results in restrictions on
transferability of the securities owned by the Purchasers which are more
restrictive than those existing as of the date hereof.
(n) If the funding of the equity investment by High Ridge Capital
Partners II, L.P. in SelectQuote (as described in that certain Consent to
Merger dated December 16, 1999 by and between the Purchasers, SelectTech,
SQIS and SelectQuote) shall not have occurred within five (5) business days
subsequent to the merger of SelectTech with and into SQIS.
(o) If all of the Debentures held by Protective have not been
prepaid in full, including any and all interest and other charges accrued
through the date of prepayment within five (5) business days subsequent to
the merger of SelectTech with and into SQIS.
Upon the occurrence of any Event of Default described in subsections
(a), (b), (h) or (i) above, the unpaid principal amount of the Debentures
together with any accrued and unpaid interest thereon, shall, at the election
of the Purchaser, become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by SelectQuote; or upon the occurrence of any other Event of
Default, Purchasers may, by written notice to SelectQuote, declare the unpaid
principal amount of the Debentures to be, and the same shall forthwith
become, due and payable, together with any interest accrued on the Debentures.
SECTION 5.2 SUITS FOR ENFORCEMENT. In addition to the remedies set
forth above, if any Event of Default shall have occurred and be continuing,
the holder of any Debentures may proceed to protect and enforce its rights,
pursuant to Section 13.8, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the exercise
of any power granted in this Agreement, or the holder of any Debentures may
proceed to enforce the payment of all sums due upon such Debentures or to
enforce any other legal or equitable right of the holder of such Debentures.
If SelectQuote shall default in the making of any payment due under any
Debentures or in the performance or observance of any agreement
contained in this Agreement, SelectQuote will pay to the holder thereof such
further amounts, to the extent lawful, as shall be sufficient to pay the
costs and expenses of collection or of otherwise enforcing such holder's
rights, including reasonable counsel fees.
SECTION 5.3 REMEDIES CUMULATIVE. No remedy herein conferred upon the
holder of any Debenture is intended to be exclusive of any other remedy and
each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.
SECTION 5.4 REMEDIES NOT WAIVED. No course of dealing between
SelectQuote and the holder of any Debenture and no delay or failure in
exercising any rights hereunder or under any Debenture in respect thereof
shall operate as a waiver of any Purchaser's rights or the rights of any
holder of such Debentures.
ARTICLE 6
PREPAYMENT
SECTION 6.1 PREPAYMENT. SelectQuote shall have no right to prepay
any or all of the Debentures prior to July 1, 2000. Subject to each
Purchaser's right of conversion as set forth in ARTICLE 7, at any time on or
after July 1, 2000, SelectQuote shall have the right to prepay any or all of
the Debentures, in principal amounts of not less than Five Hundred Thousand
Dollars ($500,000), by giving notice of its intent to prepay specifying the
date fixed for such prepayment, not less than thirty (30) days prior to the
date of such intended prepayment; PROVIDED, HOWEVER, if at the time such
prepayment notice is given, the Debentures are held by more than one Person
and the intended prepayment is for less than all of the Debentures, such
prepayment shall be made to all Debenture holders on a pro rata basis based
on the total principal amount of Debentures held at the time by such holder.
SECTION 6.2 INITIAL PUBLIC OFFERING. Upon the closing of an initial
offering of its shares of Common Stock to the public pursuant to an
underwritten offering registered with the SEC on Form S-1 or on a similar
form (an "Initial Offering"), any holder that has not elected to convert the
Debentures held by such holder pursuant to the provisions of SECTION 7.2
hereof prior to the completion of such Initial Offering, may be prepaid in
full by SelectQuote, at its option, on the date of the closing of such
offering. SelectQuote shall give the Debenture holders not less than fifteen
(15) days notice prior to the date of the closing of the offering.
SECTION 6.3 SURRENDER OF SECURITIES; NOTATION THEREON. SelectQuote
may, as a condition of payment of the Debentures, require the holder to
present such Debenture for notation of such payment and, if such Debenture be
paid in full, require the surrender thereof.
ARTICLE 7
CONVERSION
The Debentures shall be convertible into shares of Common Stock as
hereinafter set forth:
SECTION 7.1 RIGHT OF CONVERSION; CONVERSION PRICE. The holder of any
Debenture shall have the right, in its sole discretion, at any time, and from
time to time, and prior to the Maturity Date, to convert any or all of the
principal balance of such Debenture then outstanding in increments of
$100,000 (unless the principal balance then outstanding is less than
$100,000, in which case a Purchaser must convert the remaining principal
balance) into such number of shares of Common Stock as is obtained by
dividing (a) the principal balance to be converted, by (b) $1.67/.641597 (the
"Conversion Price"). The holder of any Debenture shall exercise its right of
conversion hereunder by delivering to SelectQuote the Notice of Conversion
attached to the Debenture certificate before the earlier of (i) the date of
prepayment or (ii) the Maturity Date. If SelectQuote subdivides or combines a
larger or smaller number of shares of its outstanding shares of Common Stock,
then the Conversion Price shall be proportionally decreased in the case of a
subdivision and increased in the case of a combination, effective in either
case at the close of business on the date that the subdivision or combination
becomes effective.
SECTION 7.2 INITIAL OFFERING; RIGHT OF CONVERSION. Notwithstanding
anything contained in this Agreement to the contrary, if SelectQuote selects
underwriters to prepare an Initial Offering, SelectQuote shall promptly, but
in any case, not more than thirty (30) days after such selection, notify the
holders of all Debentures of such proposed offering, which notice shall set
forth the terms of such agreement and, to the extent then known, the terms of
the Initial Offering (the "Registration Notice"), and such holders shall have
the right, exercisable in their sole discretion, to convert any or all of the
Debenture Balance into Common Stock as set forth in SECTION 7.1 above. The
holder of any Debenture shall exercise its right of conversion hereunder by
delivering to SelectQuote the Notice of Conversion attached to the Debenture
certificate (the "Notice of Conversion") not later than 5:00 P.M. Central
Standard Time, on the second business day immediately preceding the closing
of the offering.
SECTION 7.3 ISSUANCE OF SHARES OF COMMON STOCK ON CONVERSION. As
promptly as practicable after the surrender of any Debenture for conversion,
SelectQuote shall deliver or cause to be delivered to the Debenture holder
certificates representing the number of fully paid and nonassessable shares
of Common Stock into which such Debenture may be converted in whole or in
part and a new Debenture for any unconverted portion of the surrendered
Debenture. Such Conversion shall be deemed to have been made at the close of
business on the date that such Debenture is surrendered for conversion.
SECTION 7.4 FRACTIONAL SHARES. No fractional shares shall be issued
upon the conversion of any Debenture. If the conversion of any Debenture
results in a fraction, an amount equal to such fraction multiplied by the
fair value of a share of Common Stock as determined by the Board in good
faith on the day of conversion shall be paid in cash by SelectQuote to such
holder.
SECTION 7.5 RECLASSIFICATION OR CHANGE OF COMMON STOCK OR
SELECTQUOTE'S CONSOLIDATION, MERGER OR SALE OF PROPERTY AS AN ENTIRETY. In
the case of any proposed
reclassification or change of outstanding shares of Common Stock, or any
proposed consolidation of SelectQuote with or into another corporation (other
than a merger with a Subsidiary in which merger SelectQuote is the continuing
corporation and which does not result in any reclassification of or change in
the number of outstanding shares of Common Stock) or any proposed sale or
conveyance to another corporation of the assets of SelectQuote as an entirety
or substantially as an entirety or any similar event (collectively, an
"Event"), SelectQuote shall promptly, but in any case, not less than
forty-five (45) days prior to the effective date of such Event, notify the
holders of all Debentures of such proposed Event (the "Event Notice") and
such holders shall have the right, exercisable in their sole discretion, to
convert any or all of the Debentures into Common Stock in accordance with the
ratio set forth in SECTION 7.1 above. The holder of any Debenture shall
exercise its right of conversion hereunder by delivering to SelectQuote the
Notice of Conversion attached to the Debenture certificate not later than
5:00 P.M. Central Standard Time, within thirty (30) days after the Debenture
holder's receipt of the Event Notice. In the event that the holder of any
Debenture does not elect to convert such Debenture in accordance with this
SECTION 7.5, such holder shall have the right, exercisable in its sole
discretion, to require SelectQuote to prepay in full all such Debentures
immediately upon the consummation of such proposed Event.
SECTION 7.6 RESERVATION OF SHARES OF COMMON STOCK FOR ISSUANCE ON
CONVERSION. SelectQuote covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issuing upon conversion of the Debentures as herein provided, such number of
shares of Common Stock as shall then be issuable upon the conversion of all
outstanding Debentures. SelectQuote covenants that all shares of Common Stock
which shall be so issuable shall, when issued, be duly and validly issued and
fully paid and nonassessable.
SECTION 7.7 TAXES ON CONVERSION. The issuance of certificates for
shares of Common Stock upon the conversion of Debentures shall be made
without charge to the converting holders of such Debentures for any tax in
respect of the issuance of such certificates, and such certificates shall be
issued in the respective names of, or in such names as may be directed by,
the holders of the Debentures converted; PROVIDED, HOWEVER, SelectQuote shall
not be liable for any income tax liabilities of any Purchaser arising from
the conversion of the Debentures or the issuance of shares of stock in
connection therewith.
ARTICLE 8
COMPLIANCE WITH SECURITIES ACT; REGISTRATION
None of the Debentures or the shares of Common Stock issuable upon
conversion of the Debentures are transferable except upon the conditions
specified in the following Sections.
SECTION 8.1 RESTRICTIVE LEGEND. Each Debenture and each certificate
for Common Stock issued on conversion shall (unless otherwise permitted by
the provisions of this Article 8
be stamped or otherwise imprinted with a legend in substantially the
following form (any such shares of Common Stock represented by a certificate
so legended are referred to as "Restricted Stock"):
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN THAT CERTAIN AMENDED AND
RESTATED DEBENTURE PURCHASE AGREEMENT DATED AS OF [ ], PROVIDING FOR
THE ISSUE AND SALE OF THE 12% SENIOR SECURED CONVERTIBLE DEBENTURES OF
SELECTQUOTE (THE "COMPANY"), AND NO TRANSFER OF SUCH SECURITIES SHALL
BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
REGULATOR AND, THEREFORE, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL THAT AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 IS
AVAILABLE.
In addition, each such Debenture or certificate for Common Stock
issued on conversion shall contain such legends as may be required by
SelectQuote's Bylaws.
SECTION 8.2 OPINION OF COUNSEL. No holder of any Debentures or
Restricted Stock shall transfer such Debentures or Restricted Stock, unless
(a) such Debentures or Restricted Stock have been registered with the SEC
under the Securities Act for the purpose of such transfer or (b) such holder
shall have caused to have been delivered to SelectQuote, prior to such
transfer, an opinion of counsel satisfactory to SelectQuote to the effect
that such transfer may be effected without registration. Upon delivery to
SelectQuote of such opinion, the Debentures or Restricted Stock may be
transferred in the manner contemplated by such opinion.
SECTION 8.3 ACKNOWLEDGMENT OF REGISTRATION RIGHTS. Purchasers and
Protective are parties to that certain Registration Rights Agreement, dated
October 15, 1998. SelectQuote, Purchasers and Protective hereby acknowledge
and affirm the terms, conditions and agreements set forth in the Registration
Rights Agreement and agree that the Registration Rights Agreement shall be
binding upon them in full upon its assumption by SelectQuote pursuant to the
Plan of Reorganization. SelectQuote, Purchasers and Protective further
acknowledge and agree that any and all references to "Company" (as that term
is defined in the Registration Rights Agreement) shall mean SelectQuote and
its successors and assigns.
ARTICLE 9
TAKE-ALONG RIGHTS
SECTION 9.1 TAKE-ALONG RIGHTS. If any of Xxxxx Xxxxxx, Xxxxxx Xxxxx,
Xxxx Xxxxxxx or Xxxx Xxxxxx (a "Selling Stockholder") proposes any sale (a
"Sale") of Common Stock (or any securities, including without limitation
option, warrants or other similar rights, convertible into or exercisable or
exchangeable for Common Stock (collectively, the "Convertible Securities"))
owned by him, then each Purchaser and Protective shall have the right (but
not the obligation) to participate as a seller in such transaction such that
Purchasers and Protective shall be entitled to sell the number of shares of
Common Stock as calculated in subsection (c) below.
(a) the Selling Stockholder shall give Purchasers and Protective
written notice of the proposed Sale of Common Stock not less than thirty (30)
Business Days before such sale is to take place. The notice ("Sale Notice")
shall set forth:
(i) the name and address of the proposed purchaser,
(ii) the number of shares of Common Stock proposed to be
transferred and the number of shares issuable upon conversion, exercise
or exchange of any other Convertible Securities to be transferred by
the Selling Stockholder(s),
(iii) the proposed amount and form of consideration and terms
and conditions of payment offered by such proposed purchaser, and
(iv) the signed agreement of the proposed purchaser
acknowledging that he or it has been informed of the terms and
conditions of this Article 9 and (A) has agreed to purchase Common
Stock in accordance with the terms hereof and (B) has agreed to be
bound by the terms contained in this Article 9 of this Agreement as if
he or it were an original signatory hereto.
(b) The take-along rights provided in this Agreement may be
exercised by any Purchaser and/or Protective by delivery of a written notice
(the "Take-Along Notice") to the Selling Stockholder(s) within ten (10)
business days after receipt of the Sale Notice. The Take-Along Notice shall
state the amount of Common Stock which said Purchaser or Protective wishes to
include in such sale to the proposed purchaser.
(c) The proposed purchaser shall purchase from Purchasers and/or
Protective the number of shares of Common Stock which shall be equal to the
lesser of (i) the number of shares designated by Purchasers and/or Protective
pursuant to SECTION 9.1(b) above or (ii) the number of shares of Common Stock
derived by multiplying (A) the number of shares of Common Stock plus the
number of shares issuable upon conversion, exercise or exchange of any other
Convertible Securities to be purchased by the proposed purchaser by (B) a
fraction, the numerator of which is the number of shares of Common Stock
owned by Purchasers and Protective, and the denominator of which is the total
number of all outstanding shares of Common Stock (assuming for purposes
hereof full exercise or conversion of all Convertible Securities) owned by
Purchasers, Protective and the Selling Stockholder.
(d) Any shares purchased from Purchasers and/or Protective pursuant
to this Article 9 shall be purchased at the same price per share and
otherwise on the same terms and conditions as the proposed Sale (it being
understood and agreed that such terms and conditions do not include the
making of any representations and warranties, indemnities or other similar
Agreements other than representations, warranties and indemnities as to the
ownership of such shares and the due authority to sell such shares).
SECTION 9.2 EXCEPTIONS. The restrictions set forth in Section 9.1
shall not apply in the following cases:
(a) Each Selling Stockholder may transfer any shares to SelectQuote
pursuant to the exercise of any right of first refusal to such shares held by
SelectQuote or in connection with the repurchase by SelectQuote of any such
shares at the original purchase price paid therefor.
(b) Each Selling Stockholder may transfer any shares to a Permitted
Transferee provided that such Permitted Transferee agrees to be bound by this
Agreement.
SECTION 9.3 PERMITTED TRANSFEREE. For purposes of this Section 9,
Permitted Transferee shall mean a Selling Stockholder's spouse, siblings,
ancestors and descendants (whether natural or adopted), any spouses of such
siblings, ancestors or descendants, or any trust for the benefit of the
Selling Stockholder or any of the foregoing, provided that such Permitted
Transferee agrees to be bound by the terms of this Agreement.
SECTION 9.4 TERMINATION OF TAKE-ALONG RIGHTS. The provisions of this
Article 9 shall terminate upon the closing of an Initial Offering.
ARTICLE 10
LOST, ETC., INSTRUMENTS
Upon receipt by SelectQuote of an affidavit of an authorized officer
of any Purchaser that any Debenture has been lost, stolen, destroyed or
mutilated and the written agreement of such Purchaser to indemnify
SelectQuote in the event of any loss caused by a lost or stolen instrument,
and upon reimbursement to SelectQuote of all reasonable expenses incidental
thereto and upon surrender and cancellation of such Debenture, if mutilated,
SelectQuote will deliver in lieu of such Debenture a new Debenture in a like
unpaid principal amount, dated as of the date to which interest has been paid
thereon.
ARTICLE 11
AMENDMENT AND WAIVER
Any term, covenant, agreement or condition of this Agreement or of
the Debentures may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by one or more substantially concurrent written instruments
executed by each of the parties hereto.
ARTICLE 12
TAXES AND EXPENSES
SelectQuote will pay all taxes, other than income taxes, (including
interest and penalties) which may be payable in respect of the execution and
delivery of this Agreement or of the execution and delivery of any of the
Debentures or of any amendment of, or waiver or consent under or with respect
to, this Agreement or of any of the Debentures.
ARTICLE 13
MISCELLANEOUS
SECTION 13.1 RELIANCE ON AND SURVIVAL OF REPRESENTATIVES. All
agreements, representations and warranties of SelectQuote herein and in any
certificates or other instruments delivered pursuant to this Agreement shall
(a) be deemed to be material and to have been relied upon by Purchasers,
notwithstanding any investigation heretofore or hereafter made by Purchasers
or on their behalf, and (b) survive the execution and delivery of this
Agreement and the delivery of the Debentures to Purchaser, and shall continue
in effect so long as any Debenture is outstanding.
SECTION 13.2 EXPENSES.
(a) SelectQuote hereby agrees to pay the costs and expenses for the
preparation of this Agreement and in connection with the transactions
provided for herein; and
(b) SelectQuote and Purchasers respectively agree to pay the costs
and expenses (including reasonable attorney's fees) incurred by the other
party or parties in successfully (i) enforcing any of the terms of this
Agreement or (ii) proving that the other party breached any of the terms of
this Agreement.
SECTION 13.3 SUCCESSOR AND ASSIGNS. All covenants and agreements in
this Agreement by or on behalf of the respective parties hereto shall bind
and inure to the benefit of their respective successors and assigns.
SECTION 13.4 PARTIES IN INTEREST. This Agreement is made solely for
the benefit of SelectQuote and Purchasers, and where applicable, Protective,
and no other person, partnership, trust association or corporation shall
acquire or have any right under or by virtue of this Agreement.
SECTION 13.5 PRESS RELEASES. SelectQuote and each of the Purchasers
shall obtain the prior consent of the other Parties as to the form and
substance of any press release or other public disclosure materially related
to this Agreement or any other transaction provided for herein; provided,
however, that nothing in this Section 13.5 shall be deemed to prohibit any
party from making any disclosure which it deems necessary or advisable, with
the advice of counsel, in order to satisfy such party's disclosure
obligations imposed by law.
SECTION 13.6 ENTIRE AGREEMENT. This Agreement, including Exhibits
and Schedules attached hereto, constitutes the entire agreement among the
parties with respect to the Debentures and supersedes all prior agreements
and understandings of the parties in connection therewith. No covenant or
condition not expressed in this Agreement shall affect or be effective to
interpret, change or restrict this Agreement. The provisions of this
Agreement may not be changed, modified or amended except in writing duly
executed by each party hereto. In the event of any conflict between the terms
of this Agreement and the Security Agreement the provisions of this Agreement
shall control.
SECTION 13.7 NOTICES. All notices, opinions and other communications
provided for in this Agreement shall be in writing and delivered by hand or
mailed certified mail, return receipt requested, or by overnight courier such
as Federal Express:
(a) if to Protective, addressed to:
(I) Xx. Xxxxxx X. Xxxxx
Protective Life Insurance Company
P. O. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Telephone: 205/000-0000
Facsimile: 205/868-3023
(b) if to Purchasers, addressed to:
(i) Xxx Xxxxx
Security Connecticut Life Insurance Company
c/o ReliaStar Investment Research, Inc.
000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000-0000
Telephone: (612)/000-0000
Facsimile: (612)/372-5368
(ii) Xxxx Xxxxxxx
North American Company for Life and Health Insurance
0 Xxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) if to SelectQuote, addressed to:
Xxxxx Xxxxxxx
SelectQuote
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (800) 343-1985 ext. 2220
Facsimile: (000) 000-0000
All notices sent by Federal Express or other overnight courier shall be
deemed received two (2) business days after delivery to such courier postage
prepaid or four (4) business days after being mailed, postage prepaid by
certified mail. Notices delivered otherwise shall be deemed received when
actually received by the addressee thereof.
SECTION 13.8 DISPUTE RESOLUTION; ARBITRATION.
(a) BASIS FOR ARBITRATION. The parties hereto agree that the subject
matter of this Agreement and any agreement that may be entered in connection
herewith both involve and affect interstate commerce within the meaning of
the commerce clause of the United States Constitution. This Agreement shall
be irrevocable and is binding upon the parties and is subject to being
specifically enforced.
(b) MANDATORY ARBITRATION OF DISPUTES. Any action, dispute, claim,
counterclaim or controversy ("Dispute" or "Disputes"), between or among the
parties, including, without limitation, any claim based on, or arising from,
an alleged tort or contract, shall be resolved by arbitration as set forth
below. As used herein, Disputes shall include all actions, disputes, claims,
counterclaims or controversies arising in connection with any extension of or
commitment set forth in this Agreement or in any other agreement entered by
the parties in connection with this Agreement, any action taken (or any
omission to take any action) in connection with any of the foregoing, any
past, present and future agreements between or among the parties, including,
without limitation, this Agreement, or any agreement entered in connection
with this Agreement. All Disputes shall be resolved by binding arbitration in
accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules
of the American Arbitration Association ("AAA"). Defenses based on statutes
of limitation, estoppel, waiver, laches and similar doctrines, that would
otherwise be applicable to an action brought by a party, shall be applicable
in any such arbitration proceeding, and the commencement of an arbitration
proceeding with respect to this Agreement shall be deemed the commencement of
an action for such purposes.
(c) SELECTION OF ARBITRATOR. Whenever an arbitration is required
under subsection (b), the arbitrators shall be selected, except as otherwise
provided, in accordance with the Commercial Arbitration rules of the AAA. The
panel of arbitrators shall determine the resolution of the Dispute.
(d) PLACE OF ARBITRATION. Whenever an arbitration is required under
subsection (b), such arbitration shall be conducted in Denver, Colorado.
(e) MISCELLANEOUS. Any arbitration questions arising under this
Agreement shall be governed in accordance with Title 9 of the U.S. Code. This
section constitutes the entire agreement of the parties with respect to its
subject matter and supersedes all prior discussions, arrangements,
negotiations and other communications on dispute resolutions. The provisions
of this section shall survive any termination, amendment or expiration of the
Agreement in which this section is contained, unless the parties otherwise
expressly agree in writing. In the event of any Dispute governed by this
section, each of the parties shall pay all of its own expenses, and, subject
to the award of the arbitrator, shall pay an equal share of the arbitrators'
fees. The arbitrator shall have the power to award recovery of all costs and
fees (including attorneys' fees, administrative fees, arbitrators' fees and
court costs) to the prevailing party. This section may be amended, changed or
modified only by the express provisions of a writing which specifically
refers to this section and which is signed by all the parties hereto.
SECTION 13.9 LAW GOVERNING. This Agreement and the Debentures shall
be governed by and construed in accordance with the laws of the State of
Alabama.
SECTION 13.10 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of
the terms hereof.
SECTION 13.11 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
of which shall be considered one and the same instrument.
SECTION 13.12 CONSENT TO ASSIGNMENT AND ASSUMPTION. Purchasers and
Protective hereby consent to the assignment to, and the assumption by,
SelectQuote of the obligations of SQIS, as the surviving entity of the merger
between SelectTech and SQIS, set forth in the Debenture Documents.
SelectQuote hereby acknowledges and affirms the terms, conditions and
agreements set forth in the Debenture Documents and assumes the obligations
of SQIS with respect to the Debenture Documents.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date and year first above written.
SELECTQUOTE
Attest:
By: By:
------------------------------- -------------------------------
Its: Its:
---------------------------- -------------------------
SELECTQUOTE INSURANCE SERVICES
Attest:
By: By:
------------------------------- -------------------------------
Its: Its:
---------------------------- -------------------------
SECURITY CONNECTICUT LIFE INSURANCE
COMPANY
Attest:
By: By:
------------------------------- -------------------------------
Its: Its:
---------------------------- -------------------------
NORTH AMERICAN COMPANY FOR
LIFE AND HEALTH INSURANCE
Attest:
By: By:
------------------------------- -------------------------------
Its: Its:
---------------------------- -------------------------
PROTECTIVE LIFE INSURANCE COMPANY
Attest:
By: By:
------------------------------- -------------------------------
Its: Its:
---------------------------- -------------------------
(Signature Page to Amended and Restated Debenture Purchase Agreement)
2
AS TO ARTICLE 9 OF THE AGREEMENT:
----------------------------------
Xxxxx Xxxxxx
----------------------------------
Xxxxxx Xxxxx
----------------------------------
Xxxx Xxxxxx
----------------------------------
Xxxx Xxxxxxx
3
EXHIBIT B
FORM OF DEBENTURES
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
THE CONDITIONS SPECIFIED IN THAT CERTAIN AMENDED AND RESTATED DEBENTURE
PURCHASE AGREEMENT DATED AS OF DECEMBER __, 1999, PROVIDING FOR THE ISSUE AND
SALE OF THE 12% SENIOR SECURED CONVERTIBLE DEBENTURES OF SELECTQUOTE, INC.
(THE "COMPANY"), NO TRANSFER OF SUCH SECURITIES SHALL BE VALID OR EFFECTIVE
UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN EXCHANGE
FOR A 12% SENIOR SECURED CONVERTIBLE DEBENTURE OF SELECTTECH DATED OCTOBER
15, 1998 PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") PROVIDED BY SECTION
3(a)(10) OF THE ACT AND HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES REGULATOR AND, THEREFORE, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
AN OPINION OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE.
SELECTQUOTE, INC.
12% SENIOR SECURED CONVERTIBLE DEBENTURE
San Francisco, California December __, 1999
FOR VALUE RECEIVED, the undersigned, SelectQuote, Inc., a Delaware
corporation (SelectQuote), hereby promises to pay to SECURITY CONNECTICUT
LIFE INSURANCE COMPANY, a Connecticut corporation (the "holder"), or its
registered assigns, the principal sum of Nine Hundred Fifty Thousand Dollars
($950,000.00) together with interest (computed on the basis of a 360-day year
of twelve 30-day months) from the date hereof on the unpaid principal balance
at an annual rate of 12% in accordance with the terms and conditions of that
certain Amended and Restated Debenture Purchase Agreement, dated as of
December __, 1999, among SelectQuote, Security Connecticut Life Insurance
Company, Protective Life Insurance Company and North American Company for
Life and Health Insurance (hereinafter the "Purchase Agreement"). This
Debenture is to be governed by an entitled to the benefits of the Purchase
Agreement.
Payments of principal and interest are to be made at the registered address
of the holder in lawful money of the United States of America.
As provided in the Purchase Agreement, this Debenture is subject to
prepayment in whole or in part, as specified in the Purchase Agreement.
1
Upon surrender of this Debenture for registration or transfer, duly endorsed,
or accompanied by a written instrument of transfer duly executed, by the
registered holder thereof or such holder's attorney duly authorized in
writing, a new Debenture for alike principal amount will be issued to, and,
at the option of the holder, registered in the name of, the transferee.
SelectQuote may deem and treat the person in whose name this Debenture is
registered as the holder and owner hereof for the purpose of receiving
payments and for all other purposes whatsoever, and SelectQuote shall not be
affected by any notice to the contrary.
In case an Event of Default (as defined in said Purchase Agreement) shall
occur and be continuing, the principal of this Debenture may become or be
declared due and payable in the manner and with the effect provided in said
Purchase Agreement.
This Debenture is convertible at the option of the holder hereof into Common
Stock of SelectQuote upon the terms provided in said Purchase Agreement. Each
holder hereof, whether upon original issue or upon transfer or assignment
hereof, accepts and agrees to be bound by such provisions.
Said Purchase Agreement contains conditions restricting and limiting the
transfer of the shares of Common Stock issuable upon the conversion of this
Debenture, all relating to compliance with the Securities Act of 1933 or any
similar Federal statute or state securities laws at the time in effect.
SELECTQUOTE, INC.
By:
--------------------------
Its:
-------------------------
ATTEST:
By:
----------------------------
Its:
---------------------------
2
NOTICE OF CONVERSION
[Letterhead of Debenture Holder]
[date]
SelectQuote, Inc.
-----------------------------------
-----------------------------------
Re: Election to Convert Debenture
Ladies and Gentlemen:
Reference is hereby made to that certain Amended and Restated Debenture
Purchase Agreement dated [___________, 1999], by and among SelectQuote, Inc.
(the "Company"), Security Connecticut Life Insurance Company and North
American Company for Life and Health Insurance (the "Purchase Agreement").
Capitalized terms not defined herein shall have the meaning given them in the
Purchase Agreement.
The undersigned hereby irrevocably elects to exercise the right of conversion
represented by the within Debenture Certificate as provided for in Section
7.1 (2.1 or 7.2) of the Purchase Agreement. If such election is being made
pursuant to Section 2.1 of the Purchase Agreement, the undersigned elects to
convert $_______________ of the outstanding principal of the Debenture into
shares of Common Stock in accordance with the terms of the Purchase
Agreement. If such election is being made pursuant to Section 7.2 of the
Purchase Agreement, the undersigned elects to convert $_______________ of the
outstanding principal of the Debenture into shares of Common Stock in
accordance with the terms of the Purchase Agreement.
Please issue a certificate or certificates for such shares of Common Stock in
the name of, and pay any cash for any fractional shares to:
Name:
------------------------------------------
Address:
---------------------------------------
Taxpayer ID No.:
-------------------------------
(Please print Name, Address and Taxpayer ID No.)
---------------------------------------
By:
----------------------------
Its:
---------------------
3
