Exhibit 4.5
INVESTMENT AGREEMENT
by and between
SELECTQUOTE, INC.,
HIGH RIDGE CAPITAL PARTNERS II, L.P.,
XXXXX & XXXXXXXX CAPITAL TECHNOLOGY VENTURE FUND, L.P.,
XXXXX & MCLENNAN CAPITAL TECHNOLOGY PROFESSIONALS VENTURE FUND, L.P.,
TRIDENT II, X.X.
XXXXX & XXXXXXXX EMPLOYEES' SECURITIES COMPANY, L.P.
and
XXXXX & MCLENNAN CAPITAL PROFESSIONALS FUND, L.P.
Dated as of February 29, 2000
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "AGREEMENT") is made as of the 29th day
of February, 2000 by and among SelectQuote, Inc., a Delaware corporation (the
"COMPANY"), Xxxxx & XxXxxxxx Capital Technology Venture Fund, L.P., a Delaware
limited partnership, Xxxxx & McLennan Capital Technology Professionals Venture
Fund, L.P., a Delaware limited partnership, Trident II, L.P., a Cayman Islands
exempted limited partnership, Xxxxx & XxXxxxxx Employees', Securities Company,
L.P., a Cayman Islands exempted limited partnership, Xxxxx & McLennan Capital
Professionals Fund, L.P., a Cayman Islands exempted limited partnership
(collectively, the "MARSH PARTIES"), McCutchen, Doyle, Xxxxx & Enersen, LLP
("MDBE") and High Ridge Capital Partners II, L.P., a Delaware limited
partnership (together with the Marsh Parties, each a "PURCHASER" and
collectively, the "PURCHASERS").
WHEREAS, each Purchaser wishes to subscribe for and purchase shares of
the Company's Series E Preferred Stock, par value $0.01 per share (the "SERIES E
PREFERRED");
WHEREAS, the Company wishes to issue and sell to the Purchasers shares
of Series E Preferred;
WHEREAS, the Company and the Purchasers wish to provide, as set forth
herein, for certain rights and obligations of the parties hereto relating to the
Series E Preferred;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
SALE AND PURCHASE OF SERIES E PREFERRED
1.1 SALE AND PURCHASE. Subject to the terms and conditions of this
Agreement, the Company will issue and sell to each Purchaser, and each Purchaser
agrees, severally and not jointly, to purchase from the Company, the number of
shares of Series E Preferred set forth opposite such Purchaser's name on
Schedule 1 at a price of $5.15 per share (the "PRICE PER SHARE"), on the Closing
Date.
1.2 CERTAIN DEFINED TERMS.
(a) "AMENDED REGISTRATION RIGHTS AGREEMENT" shall mean the Existing
Registration Rights Agreement, as amended by Amended and Restated Registration
Rights Agreement, dated as of February 29, 2000, by and among the Company, the
Purchasers, and
the holders of more than 50% of the Registrable Securities under the Existing
Registration Rights Agreement.
(b) "CHANGE IN CONTROL" shall have the meaning set forth in Section
5.2(a).
(c) "COMMON STOCK" shall mean the common stock, $0.01 par value, of the
Company.
(d) "CONVERTED SHARES" shall have the meaning set forth in Section 3.15
of this Agreement.
(e) "DEBENTURES" shall mean the 12% Senior Secured Convertible
Debentures issued by SelectTech on October 15, 1998 and assumed by the Company
under the Agreement and Plan of Reorganization and $1,900,000 aggregate
principal amount of 12% Senior Secured Convertible Debentures of the Company
issued in exchange for the same principal amount of such Debentures of
SelectTech following the Merger.
(f) "ENFORCEABILITY EXCEPTIONS" shall have the meaning set forth in
Section 3.5 of this Agreement.
(g) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "EXISTING PREFERRED STOCK" shall mean the Series A Preferred, the
Series B Preferred, the Series C Preferred and the Series D Preferred.
(i) "EXISTING REGISTRATION RIGHTS AGREEMENT" shall mean the
Registration Rights Agreement, dated as of December 23, 2000, by and among the
Company and the investors listed on Exhibit A thereto.
(j) "HOLDER" shall have the meaning set forth in Section 5.2(a) of this
Agreement.
(k) "INTELLECTUAL PROPERTY" shall mean any or all of the following and
all rights associated therewith: (i) all domestic and foreign patents and
applications therefor and all reissues, divisions, renewals, extensions,
continuations and continuations-in-part thereof; (ii) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, proprietary rights and processes, know how, technology
rights and licenses, research and development in progress, technical data and
customer lists, and all documentation relating to any of the foregoing; (iii)
all copyrights, copyrights registration and applications therefor, and all other
rights corresponding thereto throughout the world; (iv) all mask works, mask
work registrations and applications therefore; (v) all industrial designs and
any registrations and applications therefor; (vi) all trade names, logos, common
law trademarks and service marks; trademark and service xxxx registrations and
applications therefor and all goodwill associated therewith; and (vii) all
computer software including all source code, object code, firmware, development
tools, files, records and data, all media on which any of the foregoing is
recorded and all documentation related to any of the foregoing.
2
(l) "LIQUIDATION AMOUNT" shall have the meaning set forth in Section
3.3 of the Restated Certificate of Incorporation.
(m) "MANDATORY REDEMPTION DATE" shall mean December 27, 2004.
(n) "NEW SECURITIES" shall have the meaning set forth in Section 5.2(b)
of this Agreement.
(o) "1940 ACT" shall mean the Investment Company Act of 1940, as
amended.
(p) "PERSON" or "PERSONS" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
(q) "PRICE PER SHARE" shall have the meaning set forth in Section 1.1
of this Agreement.
(r) "PURCHASED SHARES" shall have the meaning set forth in Section 3.15
of this Agreement.
(s) "QUALIFYING PUBLIC OFFERING" shall mean the consummation of a firm
commitment underwritten public offering of Common Stock by the Company on or
before December 31, 2000 of at least $25,000,000 and a price per share (subject
to appropriate adjustment in the event of a stock split, reverse stock split,
stock dividend, subdivision, reclassification, combination, exchange,
recapitalization or other similar transaction) of at least $10.
(t) "RELATED PARTY TRANSACTION" shall mean any transaction to which the
Company or any of its Subsidiaries is a party and in which any of the following
persons had or will have a direct or indirect material interest: (i) any
director or executive officer of the Company or any of its Subsidiaries, (ii)
any nominee for election as a director of the Company or any of its
Subsidiaries, (iii) any security holder who is known to the Company to own of
record or beneficially more than five percent of any class of the Company's
voting securities and (iv) any member of the immediate family of any of the
foregoing persons.
(u) "RESTATED CERTIFICATE OF INCORPORATION" shall mean the amended and
restated Certificate of Incorporation of the Company as filed with the Secretary
of State of the State of Delaware on February 29, 2000.
(v) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
(w) "SERIES A PREFERRED" shall mean the Series A Preferred stock, par
value $0.01 per share, of the Company.
(x) "SERIES B PREFERRED" shall mean the Series B Preferred stock, par
value $0.01 per share, of the Company.
3
(y) "SERIES C PREFERRED" shall mean the Series C Preferred stock, par
value $0.01 per share, of the Company.
(z) "SERIES D PREFERRED" shall mean the Series D Preferred stock, par
value $0.01 per share, of the Company.
(aa) "SERIES E DIRECTOR" shall have the meaning set forth in Section
8.2(a) of this Agreement.
(bb) "SERIES E PREFERRED" shall have the meaning set forth in the first
recital.
(cc) "SHARES" shall mean, collectively, (i) the Series E Preferred
issued and sold pursuant to this Agreement, and (ii) the Common Stock issued
upon conversion of the Series E Preferred in accordance with the Company's
Restated Certificate of Incorporation.
(dd) "SIGNIFICANT SUBSIDIARY" shall mean any Subsidiary of the Company
which is a "significant subsidiary" as defined in Section 1.02(w) of Regulation
S-X of the Securities and Exchange Commission.
(ee) "SUBSIDIARY" of any Person shall mean (i) a corporation, a
majority of whose outstanding shares of capital stock or other equity interests
with voting power, under ordinary circumstances, to elect directors, is at the
time, directly or indirectly, owned by such Person, by one or more subsidiaries
of such Person or by such Person and one or more subsidiaries of such Person,
and (ii) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (x) at
least a majority ownership interest or (y) the power to elect or direct the
election of at least a majority of the directors or other governing body of such
Person.
(ff) "SQIS" shall mean SelectQuote Insurance Services, a California
corporation.
ARTICLE II
CLOSING DATE; DELIVERIES
2.1 CLOSING DATE. The closing of the purchase and sale of the Series E
Preferred contemplated hereby shall be held at the offices of McCutchen, Doyle,
Xxxxx & Xxxxxxx, LLP, 0000 Xxxxxx Xxxxx, Xxxx Xxxx, Xxxxxxxxxx at 10:00 a.m. on
March 20, 2000 or at such time and place as the Company and the Purchasers may
mutually agree. Such time is hereinafter referred to as the "CLOSING," and the
date of the Closing is hereinafter referred to as the "CLOSING DATE."
2.2 DELIVERIES. Subject to the satisfaction or waiver of the relevant
conditions set forth herein:
(a) at or prior to the Closing, the Company shall deliver to the
Purchasers all documents required by Section 7.1 hereof,
4
(b) at the Closing, each Purchaser shall pay to the Company, by wire
transfer of immediately available funds, the product of (i) the number of shares
purchased by such Purchaser pursuant to this Agreement, multiplied by (ii) the
Price Per Share, and the Company shall deliver to each Purchaser a stock
certificate representing its respective number of shares of Series E Preferred.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers as
follows:
3.1 ORGANIZATION AND GOOD STANDING. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and has
full corporate power and authority to carry on its business as now being
conducted. Each of the Company and its Subsidiaries is duly qualified or
authorized to do business as a foreign corporation and is in good standing in
each jurisdiction in which the conduct of its business or the ownership, leasing
or operation of its properties requires such qualification or authorization,
except where the failure so to qualify or be authorized would not individually
or in the aggregate have a material adverse effect (financial or other) on the
Company and its Subsidiaries, taken as a whole.
3.2 CAPITALIZATION.
(a) Immediately prior to the Closing, the Company's authorized capital
stock will consist of (i) 100,000,000 shares of Common Stock, 10,497,974 shares
of which will be issued and outstanding, 2,041,845 shares of which will be
reserved for issuance upon conversion of the Series E Preferred, 3,139,961
shares of which, in the aggregate, will be reserved for issuance upon conversion
of the Series A Preferred, Series B Preferred, Series C Preferred and Series D
Preferred, 6,556,542 shares of which will be reserved for issuance upon the
exercise of outstanding options under the Company's Stock Option Plan (a copy of
which has been delivered to the Purchasers), and 729,961 shares of which will be
reserved for issuance under the Debentures, (ii) 10,000,000 shares of preferred
stock, par value $0.01 per share, 2,500,000 shares of which are designated
Series A Preferred (1,137,235 shares of which will be issued and outstanding);
1,250,000 shares of which are designated Series B Preferred (821,690 shares of
which will be issued and outstanding); 750,000 shares of which are designated
Series C Preferred (69,925 shares of which will be issued and outstanding);
50,000 shares of which are designated Series D Preferred (50,000 of which will
be issued and outstanding) and 2,041,845 shares of which are designated Series E
Preferred (none of which will be issued and outstanding). As of the Closing, all
issued and outstanding shares of Common Stock, Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred and Series E Preferred will
have been duly and validly authorized and issued and will be fully paid and
nonassessable.
(b) Except as set forth in Section 3.2(a) or on SCHEDULE 3.2(b) hereto,
there exist no (i) outstanding options, warrants or other rights to purchase or
subscribe for any equity securities or other ownership interests of the Company
or any of its Subsidiaries, (ii)
5
obligations of the Company or any of its Subsidiaries, whether absolute or
contingent, to issue any shares of equity securities, (iii) securities directly
or indirectly convertible into or exercisable or exchangeable for any equity
securities of the Company or any of its Subsidiaries, (iv) preemptive or similar
rights with respect to the issuance of any equity securities of the Company or
any of its Subsidiaries, (v) registration or similar rights with respect to any
capital stock of the Company or any of its Subsidiaries or (vi) other
stockholder agreements, voting agreements or trusts, proxies or other agreements
or contractual obligations among the stockholders of the Company with respect to
voting or disposition of any capital stock or other equity interests of the
Company or any of its Subsidiaries. SCHEDULE 3.2(b) sets forth the aggregate
number of shares covered by the options, warrants and other rights,
respectively, referred to in item (i) of this Section 3.2(b), as well as the
respective expiration dates and exercise prices with respect to such options,
warrants and rights.
3.3 SUBSIDIARIES.
(a) SCHEDULE 3.3(a) sets forth a true and complete list of all of the
corporations, partnerships and joint ventures in which the Company owns,
directly or indirectly, any shares of capital stock or any partnership or joint
venture interest, together with a listing, as to each such corporation,
partnership or joint venture, of the nature and ownership of its capital stock
or partnership or joint venture interests and of the other equity holders in
such entities.
(b) All of the outstanding shares of capital stock of SQIS and the
Subsidiaries of SQIS have been duly authorized and validly issued, are fully
paid and nonassessable and are wholly owned by the Company or SQIS, as the case
may be, free and clear of any liens, encumbrances, security agreements, options,
claims, charges or restrictions of any nature whatsoever.
3.4 AUTHORIZATION. The Company has all requisite corporate power and
authority to issue and sell the Series E Preferred, to enter into this Agreement
and the Amended Registration Rights Agreement, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby (including, without limitation, the conversion of shares of Series E
Preferred into shares of Common Stock). The execution and delivery of this
Agreement and the Amended Registration Rights Agreement, the execution,
acknowledgment and filing with the Delaware Secretary of State of the Restated
Certificate of Incorporation and the performance by the Company of its
obligations hereunder and under the Restated Certificate of Incorporation and
the Amended Registration Rights Agreement have been duly and validly authorized
by all requisite corporate proceedings on the part of the Company. This
Agreement and the Amended Registration Rights Agreement have been duly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery of this Agreement and the Amended Registration Rights Agreement by the
Purchaser, constitute valid and legally binding agreements of the Company,
enforceable against the Company in accordance with their terms except (a) as the
same may be limited by applicable bankruptcy, insolvency, moratorium or similar
laws of general application relating to or affecting creditors' rights,
including, without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers, and (b) for the limitations
imposed by general
6
principles of equity. The foregoing exceptions set forth in subsections (a) and
(b) of this Section 3.4 are hereinafter referred to as the "ENFORCEABILITY
EXCEPTIONS."
3.5 CONSENTS AND APPROVALS. Except as set forth in SCHEDULE 3.5,
neither the execution and delivery of this Agreement or the Amended Registration
Rights Agreement nor the consummation of the transactions contemplated hereby or
thereby (including, without limitation, the conversion of shares of Series E
Preferred into shares of Common Stock) will violate, result in a breach of,
constitute a default (or an event which, with the giving of notice or the
passage of time or both, would constitute a default) under, result in the
acceleration of any indebtedness, conflict with, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its Subsidiaries pursuant to (i) the respective certificate of
incorporation or charter or by-laws of the Company or any of its Subsidiaries,
(ii) any agreement, indenture or other instrument to which the Company or any of
its Subsidiaries is a party or by which any of their respective properties is
bound, or (iii) any judgment, decree, order or award of any court or
governmental body applicable to any of them, except, in the case of clauses (ii)
and (iii), to the extent that the occurrence of any such event would not have a
material adverse effect (financial or other) on the Company and its
Subsidiaries, taken as a whole. To the knowledge of the Company and its
Subsidiaries, no consent, approval or authorization of, or declaration, filing
or registration with, any governmental or regulatory authority or any other
person (either governmental or private), is required to be obtained or made by
the Company or any of its Subsidiaries in connection with the execution and
delivery by the Company of this Agreement or the Amended Registration Rights
Agreement or the consummation by the Company of the transactions contemplated
hereby or thereby.
3.6 FINANCIAL STATEMENTS OF THE COMPANY.
(a) The audited financial statements of SQIS and its Subsidiaries, on a
consolidated basis, as of and for the twelve months ended on June 30, 1999, the
audited financial statements of SelectTech, on a consolidated basis, as of and
for the twelve months ended on June 30, 1999, and the unaudited balance sheet of
the Company as at December 31, 1999 and the statement of operations for the
period from the incorporation of the Company to December 31, 1999, together with
the related notes thereto (collectively, the "COMPANY FINANCIAL STATEMENTS"),
copies of all of which are attached as SCHEDULE 3.6, were prepared from the
books and records of the Company and present fairly the financial position and
results of operations of the Company as of and for the periods indicated in
accordance with GAAP consistently applied subject to normal and recurring year
end adjustments.
(b) The Company has no material liabilities, obligations or loss
contingencies that are required to be reflected in the Company's financial
statements under GAAP, other than: (i) liabilities disclosed or provided for in
the Company Financial Statements including the notes thereto; (ii) liabilities
incurred in the ordinary course of business since December 31, 1999; and (iii)
liabilities set forth in SCHEDULE 3.6(b).
3.7 NO MATERIAL ADVERSE CHANGE. Subsequent to June 30, 1999, there has
not been any development involving a material adverse change (financial or
other) with respect to the Company and its Subsidiaries, taken as a whole.
7
3.8 COMPLIANCE WITH ORGANIZATIONAL DOCUMENTS AND LAWS. Attached hereto
as EXHIBIT 1 and EXHIBIT 2, respectively, are true, complete and accurate copies
of the Restated Certificate of Incorporation and Bylaws of the Company as will
be in full force and effect on the Closing Date. Neither the Company nor any of
its Subsidiaries is in violation of its certificate of incorporation or charter
or bylaws. The operation, conduct, lease and ownership of the property and
business of the Company and each of its Subsidiaries is being conducted in
compliance, in all material respects, with all federal, state and local laws,
rules, regulations and ordinances and all judgments and orders of any court or
governmental authority that the Company or any of its Subsidiaries knows to be
applicable to it, except where such violations would not individually or in the
aggregate have a material adverse effect (financial or otherwise) on the Company
and its Subsidiaries, taken as a whole.
3.9 LICENSES AND PERMITS; APPOINTMENTS. Each of the Company and its
Subsidiaries is duly licensed and possesses all requisite permits, licenses,
consents and qualifications required by applicable law for the purpose of
conducting its business and owning its properties in each jurisdiction in which
the conduct of its business or the ownership of its properties requires such
license, permit or qualification, except where the failure to have any such
license, permit, consent or qualification would not individually or in the
aggregate have a material adverse effect (financial or other) on the Company and
its Subsidiaries, taken as a whole. Without limiting the generality of the
foregoing, SelectQuote Insurance Services, a Subsidiary of the Company,
possesses state insurance licenses or permits in the District of Columbia and
every state other than Hawaii and South Dakota, and has national appointments by
the insurance carriers identified on SCHEDULE 3.9.
3.10 CONTRACTS; NO VIOLATION OF CONTRACTS, ETC. Attached hereto as
SCHEDULE 3.10 is a list of all contracts, agreements, indentures, leases or
other instruments to which the Company or any of its Subsidiaries is a party
which are material to the business, operations or properties of the Company and
its Subsidiaries, taken as a whole, including, without limitation, any
shareholder, registration rights or employment agreements to which the Company
or any of its Subsidiaries is a party. Each Purchaser may receive a copy of any
items listed on SCHEDULE 3.10 upon request. Neither the Company nor any of its
Subsidiaries is in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any contract, agreement, indenture, lease or other instrument
to which the Company or any of its Subsidiaries is a party or by which any of
them or any of their respective properties may be bound, except for any such
default that would not individually or in the aggregate have a material adverse
effect (financial or other) on the Company and its Subsidiaries, taken as a
whole.
3.11 LITIGATION. Except as set forth in SCHEDULE 3.11, there is no
legal, administrative, arbitral or other proceeding, or any governmental or
regulatory investigation pending or, to the knowledge of the Company or any of
its Subsidiaries, threatened against the Company or any of its Subsidiaries or
any of their respective properties. There are no judgments, decrees or orders
enjoining the Company or any of its Subsidiaries in respect of, or the effect of
which is to prohibit or limit, any business practice or the acquisition of any
property or the conduct of business in any area except those which would not
individually or in the aggregate have a material adverse effect (financial or
other) on the Company and its Subsidiaries, taken as a whole.
8
3.12 EMPLOYEE BENEFIT PLANS; ERISA.
(a) SCHEDULE 3.12 hereto sets forth each plan, agreement, arrangement
or commitment which is an employment or consulting agreement, executive or
incentive compensation plan, bonus plan, deferred compensation agreement,
employee pension, profit sharing, savings or retirement or welfare plan,
(including, but not limited to, "employee benefit plans", as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), maintained by the Company or any Subsidiary of the Company for any
present or former employees, officers or directors of the Company or its
Subsidiaries ("COMPANY PERSONNEL") or with respect to which the Company or any
Subsidiary of the Company has liability or makes or has an obligation to make
contributions ("EMPLOYEE PLANS").
(b) All contributions or payments due under any Employee Plan have been
made. Each Employee Plan by its terms and operation is in compliance in all
material respects with all applicable laws (including, but not limited to,
ERISA, the Internal Revenue Code of 1986, as amended (the "CODE") and the Age
Discrimination in Employment Act of 1967, as amended).
(c) Neither the Company nor any Subsidiary of the Company nor any
entity that is or was at any time treated as a single employer with the Company
or any of its Subsidiaries under Section 414(b), (c), (m) or (o) of the Code has
at any time maintained, contributed to or been required to contribute to or had
any liability with respect to a plan subject to Title IV of ERISA or Section 412
of the Code (including, without limitation, a multiemployee plan within the
meaning of Section 3(37) of ERISA).
(d) Neither the Company nor any of its Subsidiaries nor any other
person, including any fiduciary, has engaged in any "prohibited transaction" (as
defined in Section 4975 of the Code or Section 406 of ERISA), which could
subject the Company or any of its Subsidiaries, or any entity the Company or any
Subsidiary of the Company has an obligation to indemnify, to any tax or penalty
imposed under Section 4975 of the Code or Section 502 of ERISA).
(e) None of the events contemplated by this Agreement (either alone or
together with any other event) will (i) entitle any Company Personnel to
severance pay, unemployment compensation, or other similar payments under any
Employee Plan or law, (ii) accelerate the time of payment or vesting or increase
the amount of benefits due under any Employee Plan or increase the compensation
payable to any Company Personnel or (iii) result in any payments (including
parachute payments within the meaning of that term under Section 280G of the
Code) under any Employee Plan or law becoming due to any Company Personnel.
(f) Each of the Company and its Subsidiaries has complied with the
Worker Adjustment and Retraining Notification Act, to the extent applicable.
3.13 TAXES. Each of the Company and its Subsidiaries has timely filed
all tax returns required to be filed (or has timely filed for appropriate
extensions thereof), which returns are complete and correct in all material
respects, and has paid, or has made adequate
9
provision or set up an adequate accrual or reserve for the payment of all taxes
required to be paid and has no material liability for taxes in excess of the
amount so paid or accruals or reserves so established. Neither the Company nor
any of its Subsidiaries is delinquent in the payment of any material tax,
assessment or governmental charge and is not delinquent in the filing of any tax
returns, and no material deficiencies for any tax assessment or governmental
charge have been threatened, claimed, proposed or assessed against it.
3.14 BROKERAGE FEES. Neither the Company nor any of its Subsidiaries
has taken any action in connection with this Agreement or the Amended
Registration Rights Agreement or the transactions contemplated hereby or
thereby, which would give rise to any valid claim against the Company or any of
its Subsidiaries, or the Purchasers for any brokerage or finder's fee.
3.15 EXEMPT TRANSACTION. Subject to the accuracy of the Purchasers'
representations in Section 4.1 of this Agreement, each of the issuance and sale
of the shares of Series E Preferred as provided hereunder (the "PURCHASED
SHARES") and the issuance of shares of Common Stock upon conversion of such
shares of Series E Preferred (the "CONVERTED SHARES") will constitute a
transaction exempt from the registration requirements of Section 5 of the
Securities Act; and neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act) or any agent acting on behalf
of the Company or any such affiliate has, directly or indirectly, sold, offered
for sale or solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be integrated with
the issuance of the Purchased Shares or the issuance of the Converted Shares in
a manner that would require registration under the Securities Act of the
issuance of the Purchased Shares or the Converted Shares.
3.16 INVESTMENT COMPANY ACT. The Company is not an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
1940 Act, and the Company will not be required to register as an "investment
company" as a result of the transactions contemplated herein.
3.17 NO INVESTMENT ADVISOR AFFILIATION. The Company is not an
"investment advisor," "affiliated company" or an "affiliated person" of an
"investment advisor" within the meaning of the 1940 Act.
3.18 INTELLECTUAL PROPERTY.
(a) No person or entity has any rights to use any of the respective
Intellectual Property of the Company or any of its Subsidiaries, except for
licenses entered into in the normal course of business.
(b) The Company and its Subsidiaries own, are licensed to use, or have
the right to use or operate under, all of their respective Intellectual
Property.
(c) To the knowledge of the Company and its Subsidiaries, the operation
of the business of the Company and its Subsidiaries as it is currently conducted
does not infringe the Intellectual Property of any other person or entity, and
neither the Company nor any of its Subsidiaries has received notice of any claim
concerning such infringement.
10
(d) To the knowledge of the Company and its Subsidiaries, no person is
infringing or misappropriating any of the respective Intellectual Property of
the Company and its Subsidiaries.
3.19 PROPERTIES, LIENS, ETC. Except as reflected in the Company
Financial Statements, including the notes thereto, and except for statutory
mechanics and materialmen's liens, liens for current taxes not yet delinquent
and liens or encumbrances which do not confer upon secured parties any rights to
property which are material to the Company or its Subsidiaries, the Company and
its Subsidiaries own, free and clear of any liens or other encumbrances, all of
their tangible and intangible property, real and personal.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, represents and warrants, as
to itself, to the Company as follows:
4.1 ACQUISITION OF SECURITIES. All of the Series E Preferred to be
purchased by the Purchaser hereunder will be acquired for investment for the
Purchaser's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and the Purchaser has no present
intention of selling, granting any participation in or otherwise distributing
any of the Series E Preferred to be purchased.
4.2 NO REGISTRATION. The Purchaser understands and acknowledges that
the offer and sale of the Series E Preferred pursuant to this Agreement will not
be registered or qualified under the Securities Act or under any other
applicable blue sky or state securities law on the grounds that the offering and
sale of the Series E Preferred contemplated by this Agreement are exempt from
registration and qualification, and that the Company's reliance upon applicable
exemptions is predicated in substantial part upon the Purchaser's
representations set forth in this Article IV.
4.3 DISPOSITION OF SECURITIES. The Purchaser covenants that in no event
will it transfer, assign, convey or otherwise dispose of any Shares unless and
until it shall have (i) furnished the Company with an opinion of counsel
reasonably satisfactory to the Company, or other evidence reasonably
satisfactory to the Company, to the effect that such disposition will not
require registration under the Securities Act or has taken appropriate action
necessary for compliance with the Securities Act and any other applicable state,
local or foreign law has been taken by it and (ii) complied with the other
provisions of this Agreement governing the transfer of Shares.
4.4 UNDERSTANDING. The Purchaser understands that if a registration
statement under the Securities Act covering the Shares is not in effect when the
Purchaser desires to sell the Shares, the Purchaser may be required to hold the
Shares for an indeterminate period unless an exemption under the Securities Act
and under any applicable blue sky or state securities law is available to the
Purchaser.
11
4.5 AUTHORIZATION. The Purchaser has all requisite power and authority
to enter into this Agreement and the Amended Registration Rights Agreement and
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Amended Registration Rights Agreement and the performance by
the Purchaser of its obligations hereunder and thereunder have been duly and
validly authorized by all requisite action on the part of the Purchaser. This
Agreement and the Amended Registration Rights Agreement have been duly executed
and delivered by the Purchaser and, assuming the due authorization, execution
and delivery of this Agreement and the Amended Registration Rights Agreement by
the Company, constitute valid and binding agreements of the Purchaser,
enforceable in accordance with their terms, subject to the Enforceability
Exceptions.
4.6 BROKERAGE FEES. The Purchaser has not taken any action in
connection with this Agreement or the Amended Registration Rights Agreement or
the transactions contemplated hereby or thereby, which would give rise to any
valid claim against the Company or any of its Subsidiaries, or any Purchaser for
any brokerage or finder's fee.
4.7 ACCREDITED INVESTOR. The Purchaser acknowledges and represents that
it is an "accredited investor" as defined in Rule 501(a) of Regulation D under
the Securities Act and has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
prospective investment in the Shares.
4.8 ACCESS TO INFORMATION. The Purchaser has had access to such
financial and other information concerning the business and financial condition
of the Company as the Purchaser desires for the purposes of making this
investment. The Purchaser has had an opportunity to discuss the Company's
business, management, and financial affairs with the Company's management and
the opportunity to review the Company's facilities and business plan. The
Purchaser has also had an opportunity to ask questions of officers of the
Company, which questions were answered to its satisfaction.
4.9 NO RELIANCE. The Purchaser has had a full opportunity to consult
legal counsel and tax counsel of its choosing, is fully aware of the legal and
tax implications of his or its investment in the Company and is not placing
reliance on the Company or its counsel with respect to any legal and/or tax
advice.
ARTICLE V
COMPANY COVENANTS
The Company hereby covenants and agrees as follows:
5.1 FINANCIAL AND OTHER INFORMATION. Until the Company shall register
any of its securities pursuant to Section 12 of the Exchange Act or becomes
subject to Section 15(d) of the Exchange Act, the Company will furnish the
following information to each Purchaser so long as such Purchaser and its
affiliates beneficially own any Shares:
(a) As soon as practicable after the end of each fiscal year, and in
any event within 90 days thereafter, an audited consolidated balance sheet as of
the end of such fiscal
12
year and the related audited consolidated statements of operations, changes in
shareholders' equity and cash flows from operations for the year then ended,
including the related notes, of the Company and its Subsidiaries. Such financial
statements shall be prepared from the books and records of the Company and its
Subsidiaries and present fairly the consolidated financial position and results
of operations of the Company and its Subsidiaries as of the respective dates
thereof or for the respective periods covered thereby in accordance with GAAP
consistently applied and shall be accompanied by the report thereon of the
Company's independent public accountant.
(b) As soon as practicable after the end of each of the first three
fiscal quarters of each fiscal year, and in any event within 60 days thereafter,
an unaudited consolidated balance sheet as of the end of the fiscal quarter then
ended and the related unaudited consolidated statements of operations,
shareholders' equity and cash flows from operations of the Company for the
quarter then ended and for the portion of the fiscal year through such date. The
Company shall use its best efforts to prepare such financial statements in
accordance with GAAP consistently applied, subject to normal and recurring year
end adjustments and except that the notes thereto may not be included.
(c) Such additional information as may be reasonably requested.
5.2 RIGHTS OF PARTICIPATION.
(a) The Company hereby grants to each Purchaser and each other holder
of Series E Preferred (each of the Purchasers and each such holder, a "HOLDER")
the right to purchase such Holder's pro rata share, as determined based on such
Holder's percentage of the Company's issued and outstanding Common Stock (on an
as converted basis) ("PRO RATA SHARE"), of any New Securities (as hereinafter
defined) which the Company may from time to time propose to issue. Such right to
purchase New Securities shall terminate upon (i) a Qualifying Public Offering or
(ii) the closing date of an acquisition of the Company by another entity by way
of merger or consolidation (other than a merger or consolidation in which the
holders of voting securities of the Company or their affiliates immediately
before the merger or consolidation own, immediately after the merger or
consolidation, voting securities of the surviving or acquiring corporation, or
of a parent party of such surviving or acquiring corporation, possessing more
than fifty percent (50%) of the voting power of the surviving or acquiring
corporation or parent party) resulting in the exchange of the outstanding shares
of capital stock of the Company for securities or consideration issued, or
caused to be issued, by the acquiring corporation or its subsidiary (a "CHANGE
IN CONTROL").
(b) "NEW SECURITIES" shall mean any shares of capital stock of the
Company, or options, warrants or other securities of the Company that are
convertible into or exchangeable or exercisable for capital stock of the
Company, that are issued by the Company; PROVIDED, HOWEVER, that "New
Securities" shall not include (i) securities offered to the public pursuant to a
Qualifying Public Offering, (ii) securities issued for the acquisition of
another corporation or other entity by the Company pursuant to a stock purchase,
merger or similar business combination, purchase of substantially all of such
other entity's assets, or other reorganization whereby the Company will own not
less than fifty-one percent (51%) of the voting power of such entity, (iii) any
securities issued as a dividend or upon a
13
recapitalization or stock split of existing securities, (iv) any stock options
and other securities issued to directors, officers and employees of the Company
or any other Subsidiary of the Company as compensation pursuant to an officer,
director or employee stock option plan or similar plan approved by the Board of
Directors of the Company, and any shares issued pursuant to the exercise of such
options, (v) Common Stock issued upon conversion of Existing Preferred Stock or
Series E Preferred and (vi) any Shares.
(c) In the event the Company receives a bona fide written offer to
purchase New Securities, which offer it intends to accept, or in the event the
Company otherwise intends to issue New Securities, it shall give each Holder
written notice of its intention. Such notice shall describe the type of New
Securities and the terms upon which the Company proposes to issue the same. Each
Holder shall have 20 days from the date of receipt of any such notice to agree
to acquire such Holder's Pro Rata Share of such New Securities, upon the terms
specified in the notice by giving written notice to the Company. The closing of
the purchase of New Securities by an acquiring Holder shall take place on the
date of the closing of the sale of New Securities described in the Company's
notice. If the sale described in the Company's notice does not occur, then each
Holder's right to purchase its Pro Rata Share of the New Securities identified
in such notice shall terminate. Such termination shall not affect each Holder's
subsequent right to purchase New Securities under this Section 5.2 pursuant to a
subsequent Company notice. Each Holder's Pro Rata Share shall be reduced
proportionately if the Company sells less than the aggregate number of shares
identified in the Company's notice.
(d) The Company shall have 90 days after its delivery of the notice
referred in subsection (c) to sell or enter into an agreement (pursuant to which
the sale of New Securities covered thereby shall be closed, if at all, within 90
days from the date of said agreement) to sell the New Securities, at a price and
upon terms no more favorable to the purchaser thereof than specified in the
Company's notice. In the event the Company has not sold the New Securities
within said 90-day period or, if later, within 90 days from the date of an
agreement entered into within said 90-day period or, if later, within 10 days of
receipt of all governmental approvals required in connection with the sale of
such New Securities pursuant to such agreement, the Company shall not thereafter
issue or sell any New Securities without first offering such New Securities to
the Holder's in the manner provided in this Section 5.2.
(e) High Ridge Capital Partners II, L.P. hereby consents to the
issuance and sale of the Series E Preferred as contemplated by this Agreement,
and waives any right it might have to purchase its pro rata share of the Series
E Preferred issued and sold under this Agreement, which right arises out of that
certain Investment Agreement, dated as of December 27, 1999, between it and the
Company, except to the extent of its purchase of shares of Series E Preferred as
specifically set forth in this Agreement.
14
ARTICLE VI
SECURITIES RESTRICTIONS
6.1 RESTRICTIONS ON TRANSFER.
(a) No sale, transfer, assignment, gift, pledge, creation of a security
interest in, mortgage, hypothecation, encumbrance, placing in trust or other
disposition of any Shares by any Purchaser shall be made unless (subject to
Section 9.11) each person to whom such disposition is proposed to be made shall
have executed and delivered to the Company a written instrument, in form and
substance reasonably satisfactory to the Company, evidencing the agreement of
such person to become bound by the provisions of this Article VI and Article
VIII hereof, effective upon the acquisition by such person of all or any part of
the Shares (or any interest therein) which are the subject of such disposition.
(b) In addition to the other provisions contained herein restricting or
governing the transfer of Shares, each Purchaser agrees that the Shares may not
be sold, transferred or disposed of, and the Company will be entitled to refuse
to register any transfer of the Shares, unless (i) such sale, transfer or
disposition is effected pursuant to an effective registration statement under
the Securities Act and in compliance with all applicable state laws or (ii) an
opinion of counsel reasonably satisfactory to the Company, or other evidence
reasonably satisfactory to the Company, to the effect that such sale, transfer
or disposition without registration may be effected without violation of the
Securities Act or any applicable state laws shall have been delivered to the
Company.
6.2 LEGENDS.
(a) All certificates representing the Shares shall bear the following
securities law legend unless and until the resale of the Shares pursuant to an
effective Registration Statement or until the Shares may be sold under Rule 144
under the Securities Act without restrictions:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(b) The legend set forth in Section 6.2(a) shall be removed and the
Company shall issue a certificate without such legend to the holder of the
Purchased Shares or Converted Shares, as the case may be, upon which it is
stamped (and no legend shall be placed on any Purchased Shares or Converted
Shares relating thereto), if, unless otherwise required by state securities
laws, the legend is no longer required to identify the Converted Shares as
"restricted securities" within the meaning of Rule 144.
15
ARTICLE VII
CONDITIONS OF CLOSING OF PURCHASE AND SALE OF THE SERIES E PREFERRED
7.1 CONDITIONS TO THE PURCHASERS' OBLIGATIONS.
The obligations of each Purchaser to purchase the Series E Preferred
and to perform at the Closing its other obligations hereunder related to the
purchase and sale of the Series E Preferred are subject to the fulfillment on or
prior to the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF OBLIGATIONS.
The representations and warranties made by the Company in Article III hereof
shall be true and correct as of the Closing Date as if made on and as of the
Closing Date; and on or prior to the Closing Date the Company shall have
performed all obligations and satisfied all conditions herein required to be
performed or satisfied by it on or prior to the Closing Date.
(b) AUDITOR'S REPORT. The Company shall have delivered to the Purchaser
copies of the audit opinion of Deloitte & Touche LLP, independent public
accountants, with respect to the June 30, 1999 SQIS Financial Statements, which
opinions shall not contain a going concern qualification and shall otherwise be
in form and substance reasonably acceptable to the Purchaser.
(c) CONSENTS AND WAIVERS. The Company shall have obtained any and all
consents, permits and waivers necessary or appropriate to be obtained by the
Company for consummation of the transactions contemplated by this Agreement and
the Amended Registration Rights Agreement.
(d) LEGAL INVESTMENT. At the time of the Closing, the purchase and sale
of the Series E Preferred hereunder shall be legally permitted by all laws and
regulations to which the Company and the Purchasers are subject and all filings
by the Company necessary under state securities laws shall have been made.
(e) COMPLIANCE CERTIFICATE. The Company shall have delivered a
certificate, executed by the Chairman, President or any Vice President of the
Company, dated the Closing Date, certifying as to the fulfillment of the
conditions specified in Sections 7.1(a), (c) and (d) (as it applies to the
Company).
(f) EVIDENCE OF CORPORATE ACTION. The Company shall have delivered a
certificate of the Secretary or any Assistant Secretary of the Company, dated
the Closing Date, certifying as to a complete and correct copy of the
resolutions of the Board of Directors of the Company (i) approving the form and
provisions of, and authorizing the execution and delivery of and consummation of
the transactions contemplated by, this Agreement and the Amended Registration
Rights Agreement, (ii) approving the execution, acknowledgment and filing with
the Delaware Secretary of State of the Restated Certificate of Incorporation and
(iii) authorizing the issuance and sale of the Series E Preferred at the Price
Per Share.
16
(g) DELIVERY OF SHARE CERTIFICATES. The Company shall deliver to the
Purchaser certificates for the Series E Preferred described in Section 1.1
hereto.
(h) LEGAL OPINION. The Company shall have delivered the opinion of
McCutchen, Doyle, Xxxxx & Xxxxxxx, LLP substantially in the form set forth in
EXHIBIT 3 hereto.
(i) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and the Amended
and Restated Registration Rights Agreement and all documents and instruments
incident to such transactions shall be reasonably satisfactory in substance and
form to the Purchaser and the Purchaser's counsel.
(j) RESTATED CERTIFICATE OF INCORPORATION. The Restated Certificate of
Incorporation shall have been duly exercised and acknowledged and properly filed
with the Delaware Secretary of State. The Company shall have delivered to the
Purchaser facsimile evidence that the Restated Certificate of Incorporation has
been so filed.
(k) AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT. The Amended and
Restated Registration Rights Agreement shall have been duly executed by the
Company, the Purchasers and a sufficient number of the Investors (as defined in
the Existing Registration Rights Agreement) so as to cause the Amended and
Restated Registration Rights Agreement to amend and restate the Existing
Registration Rights Agreement and to be in full force and effect.
(l) DIRECTOR. Xx. Xxxxxxx X. Xxxx shall have been elected as a member
of the Board of Directors of the Company, as the Series E Director, effective
upon the Closing.
(m) EMPLOYEE AGREEMENT REGARDING PROPRIETARY INFORMATION AND
INVENTIONS. Each officer and key employee of the Company shall have entered into
an Employee Agreement Regarding Proprietary Information and Inventions in the
form attached as EXHIBIT 4.
7.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligations of the
Company to issue and sell the Series E Preferred and to perform at the Closing
its other obligations hereunder related to the purchase and sale of the Series E
Preferred are subject to the fulfillment on or prior to the Closing Date of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchasers in Article IV hereof shall be true and correct
as of the Closing Date as if made on and as of the Closing Date.
(b) LEGAL INVESTMENT. At the time of the Closing, the purchase and sale
of the Series E Preferred hereunder shall be legally permitted by all laws and
regulations to which the Company and the Purchasers are subject.
17
(c) PAYMENT BY PURCHASERS. The payment by the Purchasers required by
Section 2.2(b) hereof shall have been made by wire transfer of immediately
available funds to the Company's account designated by the Company.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 PUT RIGHTS OF THE PURCHASERS.
(a) Each Purchaser shall have the right, upon at least 30 days prior
written notice given prior to the expiration of the right as set forth in
Section 8.1(b), to cause the Company to purchase any of the Shares from such
Purchaser, for a per share amount equal to the Liquidation Amount, determined as
of the date of such purchase, in the event of:
(i) a sale of assets representing 50% or more of the total
value of all assets of the Company determined on a consolidated basis,
in any single transaction or series of related transactions or any
sale, merger, reorganization or other transaction or series of related
transactions that results in the Company beneficially owning less than
50.1% of the voting stock of any Significant Subsidiary;
(ii) a Change in Control;
(iii) two or more of the following officers of the Company no
longer being employed by the Company: Xxxxxx X. Xxxxx, Xxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxxx and Xxxxx X. Xxxxxxx;
(iv) a repurchase by the Company of any of its equity
securities;
(v) the incurrence of indebtedness for money borrowed by the
Company exceeding $5,000,000 in aggregate principal amount;
(vi) a material Related Party Transaction, other than such a
transaction negotiated on an arm's-length basis; or
(vii) the sale or issuance by the Company of Common Stock for
less than $5.15 per share (subject to appropriate adjustment in the
event of a stock split, reverse stock split, stock dividend,
subdivision, reclassification, combination, exchange, recapitalization
or other similar transaction) or any securities convertible into or
exchangeable for Common Stock for an amount which, when converted or
exchanged, as the case may be, results in the acquisition of Common
Stock for an amount which is less than $5.15 per share (subject to
appropriate adjustment in the event of a stock split, reverse stock
split, stock dividend, subdivision, reclassification, combination,
exchange, recapitalization or other similar transaction).
18
(b) The put right set forth in Section 8.1(a) shall expire upon the
closing of a Qualifying Public Offering.
8.2 BOARD REPRESENTATION.
(a) The Company and the Purchasers shall take all reasonable action
within their respective powers to cause one person named by the Purchasers to be
appointed a member of the Board of Directors of the Company (the "SERIES E
DIRECTOR") to serve for a period commencing on the Closing Date and ending on
the third anniversary of the Closing Date, PROVIDED, that the Purchasers' right
to appoint a member to the Board of Directors of the Company shall be extended
to the Mandatory Redemption Date if the Company does not complete a Qualifying
Public Offering. At such time as the Purchasers and their affiliates no longer
own any Shares, the Purchasers shall cause the Series E Director to resign from
the Company's Board of Directors. The reasonable actions required of the Company
and the Purchasers in this Section 8.2 shall include, without limitation, to the
extent within their respective powers, the nomination of the Series E Director,
the execution of written consents, the calling of special meetings, the removal
of directors, the filling of vacancies on the Board of Directors and the waiving
of notice.
(b) The Series E Director shall receive the same compensation and
benefits as those paid by the Company to other non-employee directors.
8.3 DIRECTORS' AND OFFICERS' INSURANCE. The Company has obtained and
shall use its reasonable best efforts to maintain in effect, directors' and
officers' liability insurance covering the Series E Director on terms reasonably
acceptable to the Purchasers during the period in which the Series E Director
serves on the Company's Board of Directors.
8.4 INFORMATION CONFIDENTIAL. Each Purchaser acknowledges that the
information received by it pursuant hereto is confidential and for its use only.
Such Purchaser will not use such information in violation of the Securities
Exchange Act or reproduce, disclose or disseminate such information to any other
person (other than its employees, agents or advisors having a need to know the
contents of such information), except in connection with the exercise of rights
under this Agreement, unless the Company has made such information available to
the public generally or such Purchaser is required to disclose such information
by law or a governmental body.
8.5 SELECTION OF INVESTMENT BANKERS AND APPRAISERS. So long as any
Purchaser owns shares of Series E Preferred, the choice of a firm of independent
investment bankers or qualified appraisers to determine the value of assets or
of the Series E Preferred under Section 3.3 of the Restated Certificate of
Incorporation shall be made jointly by the Company and the Purchasers; PROVIDED,
that if the Company and such Purchasers are unable to agree, then such firm
shall be chosen by the American Arbitration Association.
19
ARTICLE IX
MISCELLANEOUS
9.1 MODIFICATIONS, AMENDMENTS AND WAIVERS. Any modification, amendment
or waiver hereof shall not be effective unless in writing and signed by the
parties hereto.
9.2 SURVIVAL. The representations and warranties made herein shall
survive the Closing of the purchase and sale of the Series E Preferred for a
period of two years. The covenants and agreements made herein shall survive the
Closing in accordance with their terms.
9.3 SUCCESSORS AND ASSIGNS. Subject to Section 9.11, the provisions of
this Agreement which bind, or are for the benefit of, the Purchasers also bind,
or are for the benefit of, and enforceable by, any subsequent holders of Shares
(except any subsequent holder who acquires any such Shares in a registered
public offering); PROVIDED, HOWEVER, that no provisions of this Agreement shall
be for the benefit of, or enforceable by, any subsequent holders unless and
until such third-party transferee has executed and delivered to the Company an
Additional Party Signature Page in the form attached hereto as EXHIBIT 5 and
thereby becomes bound by those terms of this Agreement by which its transferor
is subject.
9.4 ENTIRE AGREEMENT. This Agreement and any other documents delivered
pursuant hereto constitute the full and entire understanding and agreement among
the parties with regard to the subject matter hereof and thereof.
9.5 NOTICES. All notices and other communication required or permitted
hereunder shall be effective upon receipt and shall be in writing and delivered
personally, by confirmed facsimile transmission, by overnight delivery service
or by mail, postage prepaid, addressed as follows:
(a) if to the Company, to:
SelectQuote, Inc.
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, President
Telephone: (000) 000-0000 x0000
Telecopy: (000) 000-0000
with a copy to:
McCutchen, Doyle, Xxxxx & Enersen, LLP
0000 Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
20
Telecopy: (000) 000-0000
(b) if to High Ridge, to:
High Ridge Capital, LLC
00 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
High Ridge Capital, LLC
000 Xxxxxx Xxxxx Xxxx
Xxx Xxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. XxxxXxxxxxx, Xx., Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(c) if to the Marsh Parties, to:
Xxxxx & XxXxxxxx Capital, Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
Telephone: (000) 0000-0000
Telecopy: (000) 000-0000
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
21
Telecopy: (000) 000-0000
Either party may by notice given in accordance with this Section 9.5 to the
other party designate another address or person for receipt of notice hereunder.
9.6 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (ii) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability.
9.7 EXPENSES.
(a) The Company will be responsible for paying its own attorneys' and
other fees and expenses and disbursements incurred in connection with the
preparation, negotiation and execution of this Agreement ("EXPENSES"). The
Company shall also pay the fees and disbursements of one firm of attorneys for
Purchasers in connection with the preparation, negotiation and execution of this
Agreement in an amount not exceeding $35,000.
(b) Notwithstanding subsection (a) of this Section 9.7, in the event
that the transactions contemplated herein are not consummated, each party shall
be responsible for paying its own Expenses; provided, that if failure to
consummate such transactions is a result of the Company's refusal to proceed
when any Purchaser has fulfilled or agreed to fulfill its obligations hereunder,
then the Company shall pay all of such Purchaser's Expenses, including legal
fees and expenses.
9.8 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
9.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.
9.10 CONSTRUCTION OF AGREEMENT. The language in all parts of this
Agreement shall in all cases be construed according to its fair meaning, and not
strictly for or against any party hereto.
9.11 ASSIGNMENT; BINDING EFFECT. This Agreement may not be assigned or
delegated, in whole or in part, by any party hereto without the prior written
consent of other party hereto, which consent shall not be unreasonably withheld.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
22
9.12 NO THIRD PARTY BENEFICIARIES. This Agreement is for the benefit of
the parties hereto and is not intended to confer upon any other person any
rights or remedies hereunder.
9.13 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of California applicable to
contracts made and to be performed therein.
23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELECTQUOTE, INC.
By:
--------------------------------
Name:
Title:
HIGH RIDGE CAPITAL PARTNERS II,
L.P.
By: HIGH RIDGE XX XX, LLC,
as General Partner
By: LIBERTY STREET PARTNERS LP, as
Member
By: LIBERTY STREET CORP., as General
Partner
By:
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
XXXXX & XXXXXXXX CAPITAL
TECHNOLOGY VENTURE FUND, L.P.
By: XXXXX & MCLENNAN CAPITAL TECHNOLOGY
By: XXXXX & XXXXXXXX XX XX, Inc.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
24
XXXXX & MCLENNAN CAPITAL
TECHNOLOGY PROFESSIONALS
VENTURE FUND, L.P.
By: XXXXX & XXXXXXXX XX XX, INC.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
TRIDENT II, L.P.
By: TRIDENT CAPITAL II, L.P.
By: XXXXX & XXXXXXXX XX I, Inc.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
XXXXX & MCLENNAN EMPLOYEES'
SECURITIES COMPANY, L.P.
By: XXXXX & XXXXXXXX XX I, Inc.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
XXXXX & MCLENNAN CAPITAL
PROFESSIONALS FUND, L.P.
By: XXXXX & XXXXXXXX XX I, Inc.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
25
MCCUTCHEN, DOYLE, XXXXX &
ENERSEN, LLP
By:
-----------------------------
Name:
-------------------------
Title:
------------------------
26
SCHEDULE 1
PURCHASERS
----------------------------------------------- ---------------------------------- -----------------------------------
NAME NUMBER OF SHARES AGGREGATE AMOUNT
----------------------------------------------- ---------------------------------- -----------------------------------
High Ridge Capital Partners II, L.P. 460,513 $2,371,642.00
----------------------------------------------- ---------------------------------- -----------------------------------
Xxxxx & XxXxxxxx Capital Technology Venture 771,923 $3,975,403.45
Fund, L.P.
----------------------------------------------- ---------------------------------- -----------------------------------
Xxxxx & McLennan Capital Technology 299,357 $1,541,688.55
Professionals Venture Fund, L.P.
----------------------------------------------- ---------------------------------- -----------------------------------
Trident II, L.P. 472,968 $2,435,785.20
----------------------------------------------- ---------------------------------- -----------------------------------
Xxxxx & XxXxxxxx Employees' Securities 12,759 $65,708.85
Company, L.P.
----------------------------------------------- ---------------------------------- -----------------------------------
Xxxxx & McLennan Capital Professionals Fund, 14,617 $75,277.55
L.P.
----------------------------------------------- ---------------------------------- -----------------------------------
McCutchen, Doyle, Xxxxx & Xxxxxxx, LLP 9,709 $50,001.35
----------------------------------------------- ---------------------------------- -----------------------------------
TOTAL 2,041,846 $10,515,506.95
----------------------------------------------- ---------------------------------- -----------------------------------
27
REVISED SCHEDULE 1
TO
INVESTMENT AGREEMENT
Zebu, a Delaware corporation (the "COMPANY"), and Xxxxx & McLennan
Capital Technology Venture Fund, L.P., a Delaware limited partnership, Xxxxx &
XxXxxxxx Capital Technology Professionals Venture Fund, L.P., a Delaware limited
partnership, Trident II, L.P., a Cayman Islands exempted limited partnership,
Xxxxx & McLennan Employees" Securities Company, L.P., a Cayman Islands exempted
limited partnership, and Xxxxx & XxXxxxxx Capital Professionals Fund, L.P., a
Cayman Islands exempted limited partnership (collectively, the "MARSH PARTIES")
are each a party, among others, to that certain Investment Agreement, dated
February 29, 2000, (the "INVESTMENT AGREEMENT"). Capitalized terms used but not
defined herein shall have the meanings set forth in the Investment Agreement.
The Company and the Marsh Parties hereby agree that:
1. The shares of Series E Preferred Stock to be purchased by the Marsh
Parties as set forth in Schedule 1 to the Investment Agreement shall be
reallocated among the Marsh Parties as follows:
----------------------------------------------- ---------------------------------- -----------------------------------
NAME NUMBER OF SHARES AGGREGATE AMOUNT
----------------------------------------------- ---------------------------------- -----------------------------------
Xxxxx & McLennan Capital Technology Venture 773,166 $3,981,804.90
Fund, L.P.
----------------------------------------------- ---------------------------------- -----------------------------------
Xxxxx & XxXxxxxx Capital Technology 298,891 $1,539,288.65
Professionals Venture Fund, L.P.
----------------------------------------------- ---------------------------------- -----------------------------------
Trident II, L.P. 472,234 $2,432,005.10
----------------------------------------------- ---------------------------------- -----------------------------------
Xxxxx & McLennan Employees' Securities 12,793 $65,605.85
Company, L.P.
----------------------------------------------- ---------------------------------- -----------------------------------
Xxxxx & XxXxxxxx Capital Professionals Fund, 14,594 $75,159.10
L.P.
----------------------------------------------- ---------------------------------- -----------------------------------
2. The foregoing reallocations shall not affect (a) the Price Per Share
paid by the Marsh Parties for such shares of Series E Preferred Stock, (b) the
total number of shares of Series E Preferred Stock purchased by the Marsh
Parties or (c) the Price Per Share paid for or the total number of shares of
Series E Preferred Stock purchased by any other party to the Investment
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this instrument as
of March 21, 2000.
COMPANY:
ZEBU, a Delaware corporation
By: /s/
Xxxxxx Xxxxx, Chief Executive Officer
MARSH PARTIES
XXXXX & MCLENNAN CAPITAL XXXXX & XXXXXXXX EMPLOYEES'
PROFESSIONALS FUND, L.P. SECURITIES COMPANY, L.P.
By: Xxxxx & McLennan Capital, Inc. By: Xxxxx & XxXxxxxx Capital, Inc.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
TRIDENT II, X.X. XXXXX & MCLENNAN CAPITAL
TECHNICAL VENTURE FUND, L.P.
By: Xxxxx & XxXxxxxx Capital, Inc.
By: Xxxxx & McLennan Capital, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
By: /s/ Xxxxxxx X. Xxxxxx
XXXXX & XXXXXXXX CAPITAL
TECHNOLOGY PROFESSIONALS
VENTURE FUND, L.P.
By: Xxxxx & McLennan Capital, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
2
