Exhibit 10.5
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of this 22nd day of November, 1996, by and
between Insurance Information Exchange, L.L.C. a Delaware limited liability
corporation ("Buyer"), and InsWeb Corporation, a Delaware corporation
("Company"). Except as otherwise indicated, capitalized terms used herein are
defined in Section 8 hereof.
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase from the Company, and the Company
desires to sell to Buyer, 176,471 shares of capital stock of the Company in the
form of Series B Preferred Stock;
NOW, THEREFORE, in consideration of the premises and of the covenants,
agreements, representations and warranties hereinafter set forth and other good
and valuable consideration had and received by each of the parties hereto, the
parties hereto hereby agree as follows:
Section 1 SALE AND PURCHASE OF SHARES
1A. SALE AND PURCHASE. Upon and subject to the terms and conditions set
forth in this Agreement, at the "Closing" (as defined in Section 2A hereof) the
Company shall sell to Buyer, and Buyer shall purchase from the Company, for the
"Purchase Price" (as defined in Section 1B hereof), 176,471 shares of Series B
Preferred Stock of the Company (such shares are hereinafter called in the
aggregate the "Shares" and singly a "Share"). Such Shares shall include all of
the rights as set forth in the Certificate of Incorporation of the Company for
Series B Preferred Stock.
1B. PURCHASE PRICE. The aggregate purchase price for the Shares (the
"Purchase Price") shall be $8.25 million dollars payable to the Company at
Closing.
Section 2 THE CLOSING
2A. CLOSING. The "Closing" shall be and mean the time at which the
Company makes the sale of the Shares by delivery in a manner set forth in
Section 2B hereof, against payment of the Purchase Price as provided in Section
1B hereof. The Closing shall take place at the offices of the Company at 9:30
a.m. (local time) on November 22, 1996, or at such other time and place as the
parties may agree.
2B. DELIVERY OF THE SHARES. At the Closing the Company shall deliver to
the Buyer one or more stock certificates duly issued in the name of the Buyer
representing in the aggregate 176,471 Shares which shall pass full title to the
Shares to Buyer, free and clear of any lien, encumbrance, charge, equity or
restriction whatsoever.
Section 3 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Unless, at the Closing, each of the following conditions is either
satisfied, or waived by
Buyer in writing, the Buyer shall not be obligated to effect the transactions
contemplated by this Agreement:
3A. REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 5 hereof will be true and correct at and as of the Closing
as though then made, except to the extent of changes caused by the transactions
expressly contemplated herein.
3B. OPINION OF COMPANY'S COUNSEL. Counsel for the Company shall furnish
to the Buyer their written opinion with respect to the matters set forth in
EXHIBIT A, addressed to the Buyer and dated the date of the Closing and in form
and substance satisfactory to the Buyer.
3C. ABSENCE OF ADVERSE PROCEEDINGS. No claim, investigation, proceeding
or litigation, either administrative or judicial, shall be threatened or pending
against the Buyer or the Company, for the purpose of enjoining or preventing the
consummation of the Agreement or otherwise claiming that this Agreement, or the
consummation thereof, is improper, or which might materially and adversely
affect the right of Buyer to retain the Shares.
3D. NO ADVERSE CHANGES. There shall have been no material adverse
change in the operations of the business of the Company or material
deterioration of or damage to the assets of the Company.
3E. COMPANY CERTIFICATE. There shall be furnished to Buyer at or prior
to Closing a certificate dated as of the date of Closing signed by the Company
to the effect that all of the conditions set forth in Sections 3A, 3C, 3D, 3F,
3G, 3H and 3J hereof have been satisfied.
3F. THIRD PARTY CONSENTS. Any and all consents, approvals and
authorizations that may be required from lenders and others for the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby shall have been obtained in form and substance satisfactory
to Buyer in the exercise of its reasonable judgment.
3G. PROCEEDINGS. All corporate and other proceedings of the Company
taken or required to be taken in connection with the transactions contemplated
hereby to be consummated at or prior to the Closing and all documents incident
thereto will be satisfactory in form and substance to the Buyer and its counsel
in the exercise of their reasonable judgment.
3H. CERTIFIED CORPORATE DOCUMENTS. There shall be furnished to the
Buyer prior to or at the Closing: (a) certified copies of the Company's
certificate of incorporation and bylaws, each as in effect at the Closing; and
(b) certified copies of the resolutions duly adopted by the Company's Board of
Directors authorizing the execution, delivery and performance of this Agreement.
3I. CORPORATE RECORDS. At or before the Closing, the Company shall
deliver or make available to Buyer copies of such of the Company's stock books,
stock ledgers, minute books, corporate seal, copies of all tax returns, all
personnel files and all books, records, accounts, ledgers and files of the
Company relating to its business as the Buyer shall reasonably have requested.
3J. FINANCIAL STATEMENTS. At the Closing, the Company will deliver to
the Buyer audited financial statements of the Company as of December 31, 1995
(the "Financial Statements"). Additionally, the Company will deliver to the
Buyer at the Closing statements of income, balance sheets and retained earnings
of the Company for the period from January 1, 1996 to September 30, 1996, (the
"Pre-Closing Financial Statements").
3K. BLUE SKY. The Company shall have obtained all necessary Blue Sky
law permits and qualifications or secured exemptions therefrom, required by any
state for the offer and sale of the Shares.
3L. OTHER AGREEMENTS. The Company and the Buyer shall have entered into
a Non Exclusive Joint Marketing and License Agreement and an Asset Purchase
Agreement, the Company shall have entered into a Letter of Credit Agreement with
Buyer's affiliate, AMS Services, Inc. and shall have executed the promissory
note referenced in such agreement, and an Employment Agreement with Xx. Xxxxxxx
Enan and the Buyer shall have entered into an Option Agreement with Xx. Xxxxxxx
Enan and a Stock Purchase Agreement with certain employees of the Company each
the same as or substantially similar to the agreements attached hereto as
EXHIBIT B.
Section 4 CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
Unless, at or before the Closing, each of the following conditions is
either satisfied, or waived in writing by the Company, the Company shall not be
obligated to sell the Shares and shall not otherwise be obligated to effect the
transactions contemplated by this Agreement:
4A. REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 6 hereof will be true and correct at and as of the Closing
as though then made, except to the extent of changes caused by the transaction
expressly contemplated herein.
4B. ABSENCE OF ADVERSE PROCEEDINGS. No claim, investigation, proceeding
or litigation, either administrative or judicial, shall be threatened or pending
against the Company or the Buyer, for the purpose of enjoining or preventing the
consummation of this Agreement or showing the consummation thereof is improper.
4C. PROCEEDINGS. All corporate or other proceedings of the Buyer taken
or required to be taken in connection with the transactions contemplated hereby
to be consummated at or prior to Closing and all documents incident thereto will
be satisfactory in form and substance to the Company and its counsel in the
exercise of their reasonable judgment.
4D. BLUE SKY. The Company shall have obtained all necessary Blue Sky
law permits and qualifications, or secured exemptions therefrom, required by any
state for the offer and sale of the Shares.
4E. OTHER AGREEMENTS. The Company and the Buyer shall have entered into
the agreements described in Section 3L above.
4F. NATIONWIDE. The Company shall have obtained from Nationwide Mutual
Insurance Company ("Nationwide") as a shareholder of the Company or otherwise
any and all approvals, waivers, authorizations or other consents that are
required to sell the Shares to Buyer as contemplated by this Agreement from
Nationwide pursuant to that Certain Stock Purchase Agreement dated January 30,
1996 or otherwise including any preemptive or registration rights Nationwide may
have.
Section 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer as follows:
5A. CAPITALIZATION. The authorized capital stock of the Company
consists of 5,000,000 shares of Common Stock, of which 969,500 shares are issued
and outstanding, and 2,000,000 shares of Preferred Stock, 176,471 shares of
which have been designated Series A Preferred Stock and are issued and
outstanding. All issued and outstanding shares of the Company's capital stock
will have been duly authorized and validly issued, will be fully paid and
nonassessable and free of liens and encumbrances and will have been issued in
compliance with all applicable federal and state securities laws. The Company
has reserved 176,471 shares of Common Stock for issuance upon conversion of the
Series A Preferred Stock and will have reserved 176,471 shares of Common Stock
for issuance upon conversion of the Shares. Except as set forth on SCHEDULE 5A,
there are no preemptive rights, voting agreements, options or warrants or other
conversion privileges or rights currently outstanding to purchase any of the
authorized but unissued capital stock of the Company. There are 265,647 shares
of Common Stock reserved for issuance under the Company's 1995 Stock Option
Plan, pursuant to which options for the purchase of a total of 130,000 shares
were outstanding on January 30, 1996.
5B. ORGANIZATION AND CORPORATE POWER. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has full corporate power and authority to own its properties and to
carry on its business as now conducted. Buyer's counsel has been supplied with
true and accurate copies of the Company's certificates of incorporation and
bylaws as in effect at Closing. The Company has no subsidiaries and does not own
any shares of stock or other securities of, or interest in, any other
corporation or business.
5C. FINANCIAL STATEMENTS. The audited Financial Statements of the
Company and the Pre-Closing Financial Statements, are correct in all material
respects, have been prepared in accordance with generally accepted accounting
principles consistently applied and present fairly and fully the financial
position of the Company and the results of its operations for the respective
periods thereof.
5D. NO UNDISCLOSED LIABILITIES. The Company does not have any material
liabilities or obligations, absolute, accrued, contingent or otherwise, which
have not been reflected in the Financial Statements or the Pre-Closing Financial
Statements other than obligations under contracts and commitments incurred in
the ordinary course of business and not required under generally accepted
accounting principles to be reflected in the Financial Statements or the Pre-
Closing Financial Statements, which in the aggregate are not material to the
financial condition or operating results of the Company.
5E. ABSENCE OF CERTAIN DEVELOPMENT
Except as listed on SCHEDULE 5E or disclosed on the Pre-Closing
Financial Statements, since December 31, 1995, the Company has not:
(i) issued any notes, bonds or other debt securities or
any equity securities;
(ii) borrowed any amount or incurred or become subject to
any liabilities, except current liabilities incurred
in the ordinary course of business and except
liabilities under contracts entered into in the
ordinary course of business which do not exceed
$10,000;
(iii) declared or made any payment or distribution of cash
or other property to a shareholder with respect to
its stock or otherwise, except for normal salaries
and expense reimbursement, or purchased or redeemed
any shares of its capital stock;
(iv) mortgaged or pledged any of its properties or assets
or subjected them to any lien, security interest,
charge or other encumbrance, except liens for current
property taxes not yet due and payable;
(v) except in the ordinary course of business, sold,
assigned or transferred any of its tangible assets,
or canceled any debts or claims;
(vi) sold, assigned or transferred any patents,
trademarks, service marks, trade names, copyrights,
trade secrets or other intangible assets, or
disclosed other than to employees of the Company,
counsel for the Company, the Buyer or Buyer's
representatives any proprietary confidential
information;
(vii) suffered any extraordinary losses or waived any
rights of material value, whether or not in the
ordinary course of business or consistent with past
practice;
(viii) made capital expenditures or commitments therefor
that individually exceed $10,000 or in the aggregate
exceed $50,000;
(ix) entered into any other transaction other than in the
ordinary course of business or changed or amended or
defaulted under any material transaction, contract or
agreement; or
(x) made any loans or advances to, or guarantees for, the
benefit of any person.
5F. NO ADVERSE CHANGES. Except as disclosed on SCHEDULE 5F, since
December 31, 1995, the properties and assets of the Company have not been
materially adversely affected in any way as a result of any casualty or event;
and since December 31, 1995, there has been no material adverse change in the
operating results, financial condition, indebtedness or to the best knowledge
and belief of the Company the business prospects, customer relations, employee
relations, corporate standing, or manner of conducting the business or
operations of the Company.
5G. ASSETS. Except as specifically stated in SCHEDULE 5G hereof: (i)
the Company has good and marketable title to, or a valid leasehold interest
in, the properties and assets used by it, located on its premises, shown on
the Financial Statements or acquired thereafter, free and clear of all
claims, security interests, charges and encumbrances, except as disclosed on
the Financial Statements (including the notes thereto) or the Pre-Closing
Financial Statements with respect to items acquired thereafter and liens for
current property taxes not yet due and payable and possible minor liens and
encumbrances which do not in any case materially detract from the value of
the assets of the Company or materially impair the operations of the Company,
and which have not arisen other than in the ordinary course of business; (ii)
the Company's buildings, equipment and other tangible assets are in good
operating condition in all material respects and are fit for use in the
ordinary course of business; (iii) the Company owns, or has a valid leasehold
interest or license in, all assets necessary for the conduct of its business
as presently conducted.
5H. ACCOUNTS RECEIVABLE. As of the Closing, all accounts receivable are
bona fide and arose out of transactions made in the ordinary course of business;
are payable in accordance with their terms and to the best knowledge and belief
of the Company subject to no valid counterclaims or set offs. A reserve for bad
debts as stated on the Pre-Closing Financial Statements has been established and
is adequate in light of the Company's previous receivables collection history.
5I. TAX MATTERS. Except as set forth on SCHEDULE 5I, (i) the Company
have filed with appropriate governmental agencies all tax returns required to be
filed with such agencies and are not delinquent with respect to any such filing,
(ii) the Company has paid, or made adequate provision for the payment of, all
taxes which have or may become due pursuant to such returns and all assessments,
fees and charges claimed to be due by all federal, state, local and other taxing
authorities under the laws as in effect as of the Closing, and (iii) there are
no outstanding agreements, waivers, or other arrangements extending the
statutory period of limitations applicable to any tax return or report by the
Company, or the payment of taxes, charges or deficiencies by the Company for any
period ending at or prior to the date of this Agreement. The Company has no
notice, knowledge or reason to know, after reasonable inquiry of the officers of
the Company, that any state or local taxing authority has asserted any claim or
deficiency for non-payment of any income, franchise, sales, property or other
taxes of whatever nature. The Company has duly withheld from each payment made
to each person from whom such withholding is required by law the amount of all
taxes or other sums (including but not limited to United States federal income
taxes, any applicable state or municipal income tax, disability tax,
unemployment insurance contribution and Federal Insurance Contribution Act
taxes) required to
be withheld therefrom. The Company has paid all amounts withheld to the proper
tax receiving officers on or prior to the due date thereof.
5J. CONTRACTS AND COMMITMENTS.
a. Except as expressly contemplated by this Agreement or as set
forth on SCHEDULE 5J or SCHEDULE 5P as of the Closing, the
Company is not a party to any written or oral:
(i) pension, profit sharing, stock option, employee stock
purchase or other plan providing for deferred or
other compensation to employees or any other employee
benefit plan, or any contract with any labor union;
(ii) contract for the employment of any officer,
individual employee or other Person on a full-time,
part-time, consulting or other basis;
(iii) contract under which the Company has advanced or
loaned any amounts to any other Person;
(iv) agreement or indenture relating to the borrowing of
money or the mortgaging, pledging or otherwise
placing a lien on any material asset or material
group of assets of the Company;
(v) guarantee of any obligation;
(vi) lease or agreement under which the Company or any
subsidiary is lessee of or holds or operates any
property, real or personal, owned by any other party;
(vii) assignment, license, indemnification or agreement
with respect to any intangible property (including
copyright, know-how, trade secret or confidential
information);
(viii) warranty agreement with respect to licenses, its
services rendered or its products sold or leased;
(ix) contract or agreement prohibiting it from freely
engaging in any business or competing anywhere in the
world.
b. Except as specifically noted on SCHEDULE 5J or as noted in the
Financial Statements or Pre-Closing Financial Statements, (i)
the Company has performed all material obligations required to
be performed by it and it is not in default under or in breach
of nor in receipt of any claim of default or breach under any
agreement or instrument to which the Company is subject, (ii)
to the best knowledge and belief of the Company no event has
occurred which with the passage of time or the giving of
notice or both would result in a default, breach or event of
noncompliance under any agreement or instrument to which the
Company is subject, (iii) the Company has no present
expectations or intention of not fully performing all such
obligations, and (iv) the Company has no knowledge of any
breach or anticipated breach by the other parties to any
contract or commitment to which it is a party.
c. Buyer's counsel has had made available to it a true and
correct copy of each of the written contracts, agreements or
commitments and an accurate description of the oral contracts
which are referred to on SCHEDULE 5J, 5N, 5O AND 5P, together
with all amendments, waivers or other changes thereto. Each
contract, lease agreement or commitment referred to in
SCHEDULE 5J, 5N, 5O and 5P is valid, in full force and effect
and enforceable in accordance with its terms.
5K. PROPRIETARY RIGHTS. SCHEDULE 5K attached hereto contains a listing
and summary description of all of the Company's Proprietary Rights. The Company
possesses, through licenses or otherwise, all material Proprietary Rights
necessary to the conduct of its business. No loss or expiration of any
Proprietary Right is pending or to the best knowledge and belief of the Company
threatened and the Company has not granted, or made any commitment to grant, a
license with respect to any Proprietary Right, other than in the ordinary course
of the Company's business of licensing the Company's software systems. Except as
indicated on SCHEDULE 5K, (i) the Company owns all right, title, and interest in
and to all of the Proprietary Rights, (ii) there have been no claims made
against the Company for the invalidity, abuse, misuse, or unenforceability of
any such rights, and to the best knowledge and belief of the Company there are
no grounds for the same, (iii) the Company has not received a notice of conflict
with the asserted rights of others within the last five years, (iv) to the best
knowledge and belief of the Company the conduct of the Company's business has
not infringed any Proprietary Rights of others, and to the best knowledge and
belief of the Company the Proprietary Rights have not been infringed by other
Persons, and (v) neither the execution of the Agreement by the Company nor the
performance of the obligations hereunder shall cause the release of any Company
source code to any third party under any promissory note, indenture, agreement,
contract, license, lease, escrow, instrument or commitment to which the Company
is a party. The Company has made available to the Buyer correct and complete
copies of all licenses, sublicenses or agreements regarding the possession
and/or use of the Proprietary Rights.
5L. LITIGATION, ETC. Except as specifically noted on SCHEDULE 5L, (i)
there are no actions, suits, proceedings, orders, investigations or claims
pending or to the best knowledge and belief of the Company threatened, against
or affecting the Company at law or in equity, or before or by any governmental
department, commission, board, bureau, agency for instrumentality, and (ii) the
Company is not subject to any arbitration proceedings under collective
bargaining agreements or otherwise, or, to the best knowledge and belief of the
Company to any governmental investigations or inquiries.
5M. BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement to which the Company is a
party.
5N. INSURANCE. The attached SCHEDULE 5N entitled "Insurance Schedule"
contains a description of each insurance policy maintained by the Company with
respect to its properties, assets and businesses, and each such policy is in
full force and effect as of the Closing. To the best knowledge and belief of the
Company the Company is not in default with respect to its obligations under any
insurance policy maintained by it.
5O. NON-COMPETE AND OTHER AGREEMENTS. Except as set forth in SCHEDULE
5O, neither the Company nor to the best knowledge and belief of the Company any
of its employees is subject to any non-compete, nondisclosure, confidentiality,
employment, consulting or similar agreements relating to the present or proposed
business activities of the Company, except for confidentiality and
non-disclosure agreements between the Company and its present and former
employees. All current Company employees have executed confidentiality and
nondisclosure agreements.
5P. EMPLOYEE BENEFITS.
a. With respect to all employees and former employees of the
Company, except as set forth on the attached SCHEDULE 5P
entitled "Employee Benefits Schedule," the Company does not
presently maintain, contribute to or have any liability
(including current or potential multi-employer plan withdrawal
liability) under any:
(i) non-qualified deferred compensation or retirement
plan or arrangement which is an "employee pension
benefit plan" as such term is defined in Section 3(2)
of the Employee Retirement Income Security Act of
1974, as amended ("ERISA");
(ii) qualified defined contribution retirement plan or
arrangement which is an employee pension benefit
plan;
(iii) qualified defined benefit plan or arrangement which
is an employee pension benefit plan;
(iv) "multi-employer plan" as such term is defined in
Section 3(37) of ERISA;
(v) unfunded or funded medical, health or life insurance
plan or arrangement for present or future retirees or
present or future terminated employees which is an
employee welfare benefit plan as defined in Section
3(1) of ERISA: or
(vi) any other employee welfare benefit plan.
b. All employee welfare benefit plans listed on SCHEDULE 5P and
related trusts, insurance contracts or other funding
arrangements, if any, comply in form and in operation with the
requirements of ERISA.
5Q. COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 5Q, to the
best knowledge of the Company after inquiry of its officers and outside counsel,
the Company has complied with all laws, regulations and orders material to the
operation of its business, including properly qualifying to do business with the
Secretary of State in each state where the ownership of property or conduct of
business of the Company requires such qualification, and has not received any
written or oral notification thereof to the contrary. To the best knowledge and
belief of the Company, the Company has complied with all laws (including rules
and regulations thereunder) of federal, state, local, and foreign governments
(and all agencies thereof) concerning the environment, public health and safety,
and employee health and safety, where failure to comply would have a material
adverse effect on operations, business or assets of the Company.
5R. NO BREACH OR CONFLICT. Except for the consents required from
Nationwide and under a stockholder agreement, all of which shall be obtained or
waived by the Company prior to Closing, neither the execution of this Agreement
by the Company nor the performance of the obligations of the Company hereunder,
nor any action by the Company contemplated by this Agreement, conflicts with,
constitutes grounds for termination of, or constitutes a default under, any
promissory note, indenture, agreement, contract, license, lease, instrument or
commitment to which the Company is a party or by which it may be bound, or
conflicts with the Company's articles or certificate of incorporation or bylaws
or will result in creation of any lien, security interest encumbrances or other
charge on the Company's capital stock or assets. Neither the purchase of the
Shares by Buyer nor the consummation of the transactions contemplated by this
Agreement will result in any material adverse change in the business or
operations of the Company.
5S. OFFICER AND DIRECTORS. SCHEDULE 5S attached hereto and made a part
hereof is a true and complete list of all of the directors and officers of the
Company as of the date hereof.
5T. DISCLOSURE. The representations or warranties of the Company
contained in Section 5 and elsewhere in the Agreement, all information contained
herein and in the Schedules and Exhibits attached to this Agreement and the
documents furnished to Buyer pursuant to this Agreement is, and shall be at the
Closing, correct and complete in all material respects. Such information does
not make any untrue statement of a material fact or omit to state all material
facts required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements are made, correct,
complete and not misleading. All information relating to the Company which is
known or would on reasonable inquiry be known to the Company and which could
reasonably be anticipated to have a material adverse effect on the existing or
expected financial condition, indebtedness, operating results, customer
relations, employee relations or business properties of the Company has been
disclosed to Buyer and any such information arising prior to the Closing will
forthwith be disclosed to Buyer. All underlying documents incorporated or
referred to in such Exhibits or in documents furnished to Buyer pursuant to this
Agreement by the Company are true and correct copies thereof, as the same have
been or shall be amended or modified.
5U. OWNERSHIP OF SHARES. The Company now has and will at the Closing
have the full right, power and authority to sell and transfer the Shares hereto
to Buyer, free and clear of any lien, encumbrance, option, charge, equity or
restriction whatsoever.
5V. PRODUCT WARRANTY. Each product or service manufactured, sold,
leased, licensed or delivered by Company has been in conformity with all
applicable contractual commitments and all express and implied warranties and
Company has no liability and there is no basis for any present or future
charge, complaint, action, suit, proceeding or claim against Company giving
rise to any liability for replacement or repair thereof or other damages in
connection therewith. Except as set forth on SCHEDULE 5V, no product or
service manufactured, sold, leased, licensed or delivered by Company is
subject to any guaranty, warranty or other indemnity beyond the applicable
standard terms and conditions of sale or license. SCHEDULE 5V includes copies
of the standard terms or conditions of sale or license.
5W. VALID OBLIGATION. The execution and delivery of this Agreement and
the consummation by the Company of the transactions contemplated hereby
constitute the valid and binding obligation of the Company, enforceable in
accordance with its terms except as may be limited by bankruptcy, other similar
laws and by general principles of equity.
Section 6 REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Company as follows:
6A. ORGANIZATION. The Buyer is a limited liability corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the full corporate power and authority to own its properties
and carry on its business.
6B. AUTHORIZATION. The execution, delivery and performance of this
Agreement have been duly authorized by all requisite corporate action of the
Buyer. The Buyer has all requisite corporate authority to perform all of its
obligations under this Agreement. This Agreement constitutes valid and binding
obligations of the Buyer, subject to the effect of bankruptcy, insolvency,
reorganizations and other similar laws relating to or affecting the rights of
creditors generally, the terms of this Agreement, as well as limitations imposed
by general principles of equity.
6C. BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement to which the Buyer is a
party.
6D. NO BREACH OR CONFLICT. Neither the execution of this Agreement by
Buyer nor the performance of its obligations hereunder, nor any action by it
contemplated by this Agreement, conflicts with, constitutes grounds for
termination of, or constitutes a default under or conflicts with the Buyer's
certificate of incorporation or bylaws.
6E. CLOSING DATE. The representations and warranties of Buyer contained
in this Section 6 and elsewhere in this Agreement and all information contained
in any exhibit, schedule
or attachment hereto or in any writing delivered by, or on behalf of Buyer to
the Company, their counsel or agent will be true and correct in all material
respects on the date of the Closing as though then made.
6F. EXPERIENCE. Buyer has substantial experience in evaluating and
investing in private placement transactions so that Buyer is capable of
evaluating the merits and risks of Buyer's investment in the Company. Buyer, by
reason of its business or financial experience or the business or financial
experience of its professional advisors who are unaffiliated with and who are
not compensated by the Company or any affiliate or selling agent of the Company,
directly or indirectly, has the capacity to protect its own interests in
conjunction with the purchase of the Shares hereunder, provided that the
foregoing does not limit the right of the Buyer to rely upon the representations
and warranties of the Company set forth in Section 5.
6G. INVESTMENT. Buyer is acquiring the Shares for investment for
Buyer's own account, not as a nominee or agent, and not with the view to, or for
resale in connection with, any distribution thereof. Buyer understands that the
Shares have not been, and will not be, registered under the Securities Act by
reason of specific exemption from the registration provisions of the Securities
Act which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of Buyer's representations expressed herein.
If Buyer is not an individual, Buyer has not been formed for the specific
purpose of acquiring the Shares.
6H. RULE 144. Buyer acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. Buyer is aware of the provisions
of Rule 144 promulgated under the Securities Act which permit limited resale of
shares purchased in a private placement subject to the satisfaction of certain
conditions, including (except as limited by Rule 144(k)), among other things,
the existence of a public market for the Shares, the availability of certain
current public information about the Company, the resale occurring not less than
two years after a party has purchased and paid for the security to be sold, the
sale being effected through a "broker's transaction" or in transactions directly
with a "market maker" (as provided by Rule 144(f)) and the number of Shares
being sold during any three-month period not exceeding specified limitations.
6I. NO PUBLIC MARKET. Buyer understands that no public market now
exists for any of the securities issued by the Company, that the Company has
made no assurances that a public market will ever exist for the Shares, and
that, even if such a public market exists at some future time, the Company may
not then be satisfying the current public information requirements of Rule 144.
6J. ACCESS TO DATA. Buyer and its representatives have met with
representatives of the Company and thereby have had the opportunity to ask
questions of, and receive answers from, such representatives concerning the
Company and the terms and conditions of this transaction, as well as to obtain
any information requested by Buyer. Buyer believes that any questions raised by
Buyer or its representatives concerning the transaction have been answered to
the satisfaction of Buyer and its representatives. Buyer's decision to purchase
the Shares is based in part on the answers to such questions as Buyer and its
representatives have raised concerning the transaction
and on its own evaluation of the risks and merits of the purchase and the
Company's proposed business activities, provided that the foregoing does not
limit the right of the Buyer to rely upon the representations and warranties of
the Company set forth in Section 5.
Section 7 COVENANTS
7A. OPERATIONS.
a. The Company will elect to the Board of Directors of the
Company two persons nominated by Buyer one of which shall be
an officer of Continental Casualty Corporation ("CNA"). As
long as Buyer or any Buyer affiliate owns at least 176,471
shares of any class of stock in the Company, it shall be
entitled to at least two members on the Board of Directors,
and in the event Buyer or any Buyer affiliate owns less than
176,471 but more than 88,235 of such shares, it shall be
entitled to at least one member on the Board of Directors.
Moreover, as long as Buyer or any Buyer Affiliate owns at
least 176,471 shares of any class of stock in the Company or
until the closing of an underwritten public offering of
securities of the Company which satisfies the requirements of
the Amended Certificate for the automatic conversion of the
Shares to Common Stock, or until Buyer fails to exercise its
Option as described in the Option Agreement attached hereto in
Exhibit B, or until the responsibilities of Xx. Xxxxxx
Xxxxxxxxxx, Chairman & CEO of CNA, Mr. Xxxxxx Xxxxx, President
of CNA and Mr. Xxxxx Xxxxxx, President & CEO of iiX, are
changed so substantially, as a management team, that they no
longer control Buyer's representation on the Board of
Directors of the Company, the two directors nominated by Buyer
voting together shall have fifty one percent (51%) of the
votes to be cast by the Board of Directors on all matters
which come before the Board of Directors of the Company and
Buyer's vote of the Shares as a shareholder shall constitute
fifty one percent (51%) of all votes to be cast by all
shareholders of the Company on all matters on which the
shareholders vote.
b. In the event for any reason Hussein A. Enan terminates his
employment with the Company, or upon the fifth (5th)
anniversary of Closing if there has not been a closing of an
underwritten public offering of securities of the Company,
Buyer shall have the right to name any person to assume the
office and responsibilities of CEO of the Company as that
office and those duties are defined in the By-Laws of the
Company and are, as of Closing, being performed by Hussein A.
Enan. If Buyer shall fail to name such successor within sixty
(60) days of the termination of Mr. Enan, or said fifth (5th)
anniversary, then the Board of Directors of the Company shall
have the authority to appoint such successor.
c. In the case of the death or permanent disability of Mr. Enan,
Buyer shall promptly, at the election of Mr. Enan or his
heirs, purchase all of Mr. Enan's ownership in the Company at
a price to be determined by an independent investment banker
jointly selected by Mr. Enan or his representative and Buyer.
The Company shall send Buyer written notice of Mr. Enan's
death or permanent disability as soon as practicable after the
occurrence thereof.
d. Promptly after Closing, assuming that such insurance is
available on commercially reasonable terms the Company shall
obtain "Key Person" insurance covering the death or disability
of Mr. Enan as well as any other members of the Company
management deemed by the Board of Directors of the Company to
be essential to the success of the Company.
e. The determination of whether and when the Company will sell
shares of its Common Stock in an underwritten public offering
including the choice of underwriting and the share price shall
be in the sole discretion of Hussein A. Enan, so long as he
hold 150,000 shares of the capital stock of the Company. Buyer
hereby agrees to vote, and hereby agrees to cause its
representative on the Board of Directors to vote, in a manner
consistent with this right.
7B. AFFIRMATIVE COVENANTS OF THE COMPANY.
a. FINANCIAL INFORMATION. The Company will mail the following
reports to Buyer for so long as Buyer is a holder of any
Share:
(i) As soon as practicable after the end of each
quarterly fiscal period in each fiscal year of the
Company (other than the last quarterly fiscal period
of each such fiscal year), and in any event within
forty-five (45) days thereafter, duplicate copies of
(i) a consolidated balance sheet of the Company as at
the end of such quarter, and (ii) statements of
income, changes in shareholder's equity and cash
flows of the Company for such quarter and (in the
case of the second and third quarters) for the
portion of the fiscal year ending with such quarter),
setting forth in each case in comparative form the
figures for the corresponding periods in the previous
fiscal year, all in reasonable detail, prepared in
accordance with generally accepted accounting
principles applicable to quarterly financial
statements generally, and certified as complete and
correct, subject to changes resulting from year-end
adjustments, by a senior financial officer of the
Company, and accompanied by the certificate required
by this Agreement.
(ii) As soon as practicable after the end of each fiscal
year of the Company, and in any event within ninety
(90) days thereafter, duplicate copies of (i) a
balance sheet of the Company as at the end of such
year, and (ii) consolidated statements of income,
changes in shareholders' equity and cash flows of the
Company for such year, setting forth in each case in
comparative form the figures for the previous fiscal
year, all in reasonable detail, prepared in
accordance with generally accepted accounting
principles and accompanied by (iii) an opinion
thereon of independent certified public accountants
of recognized national standing selected by the
Company, which opinion shall, without qualification,
state that such
financial statements present fairly, in all material
respects, the financial position of the Company being
reported upon and its results of operations and cash
flows and have been prepared in conformity with
generally accepted accounting principles, and that
the examination of such accountants in connection
with such financial statements has been made in
accordance with generally accepted auditing
standards, and that such audit provides a reasonable
basis for such opinion in the circumstances, and (iv)
certification by a senior financial officer of the
Company that such financial statements are complete
and correct.
(iii) Promptly, but in any event not more than five (5)
business days after the receipt thereof, a copy of
each other report submitted to the Company by
independent certified public accountants in
connection with any annual, interim or special audit
made by them of the books of the Company.
(iv) Promptly upon their becoming available, one copy of
each financial statement, report, notice or proxy
statement sent by the Company to stockholders
generally, and of each regular or periodic report and
any registration statement, prospectus or written
communication (other than transmittal letters), and
in each amendment thereto, in respect thereof filed
by the Company with, or received by the Company in
connection therewith from, the National Association
of Securities Dealers, any securities exchange or the
Securities and Exchange Commission or any successor
agency.
(v) For so long as Buyer is eligible to receive reports
under this Section 7B(a), it shall also have the
right, at its expense, to visit and inspect any of
the properties of the Company or any of its
subsidiaries, to examine their books of account and
records, to discuss their affairs, finances and
accounts with their officers and accountants and to
consult with and advise their directors and officers
on the management of the business, all at such
reasonable times and as often as may be reasonably
requested; PROVIDED, HOWEVER, that the Company shall
not be obligated to provide any information that it
reasonably considers to be a trade secret or to be
confidential information.
b. ADDITIONAL INFORMATION. As long as Buyer (together with any
affiliates) holds not less than 50,000 Shares (or an
equivalent number consisting of the Shares and Conversion
Shares, as adjusted for recapitalizations, stock splits, stock
dividends and the like), the Company will mail the following
reports to Buyer:
(i) Prior to the end of each fiscal quarter, a budget for
the next fiscal quarter, and, as soon as prepared,
any other budgets or revised budgets prepared by the
Company.
(ii) As soon as practicable after the end of each fiscal
month, and in any event within thirty (30) days
thereafter, a monthly progress report against budget,
explaining any material discrepancies.
c. TRANSFER OF INFORMATION RIGHTS. The information rights set
forth in Sections 7B(a) and 7B(b) may be transferred in any
non-public transfer of Shares, provided that the Company is
given prior written notice of such transfer, and provided
further that the right to receive the information set forth in
Section 7B(b) may only be transferred to a holder of, or
affiliated holders who in the aggregate hold, at least the
amount of shares specified in Section 7B(b). In the event that
the Company reasonably determines that provision of
information to a transferee pursuant to this Section 7B(c)
would materially adversely affect its proprietary or
competitive position, such information may be edited in the
manner necessary to avoid such effect.
d. CONFLICTS OF INTEREST. Unless the Company first obtains
appropriate approval of its Board of Directors and, if
necessary, shareholders in accordance with the Delaware
General Corporations Law, the Company shall use its best
efforts to ensure that (a) officers of the Company will not
become indebted to the Company except in connection with stock
purchases approved by the Board of Directors, travel advances
and other transactions in the ordinary course of business, and
(b) officers of the Company will not have any direct or
indirect ownership interest in any firm or corporation with
which the Company has a business relationship or with which it
competes (except that officers may own up to five percent (5%)
of the outstanding stock in publicly traded companies which
may have a business relationship with or compete with the
Company).
e. TERMINATION OF COVENANTS. The covenants set forth in Sections
7B(a), (b) and (d) shall terminate and be of no further force
or effect at such time as the Company is required to file
reports with the Securities and Exchange Commission (the
"Commission") pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended.
f. PARTICIPATION IN FUTURE FINANCINGS. As used in this Section
7B(f), the term "New Securities" means any class or series of
stock of the Company, whether or not presently authorized, and
any warrants, options, or rights to acquire such stock, and
any instrument convertible into or exchangeable for such
stock.
(i) Except as provided in paragraph (iii) below, if the
Company shall issue any New Securities, it shall
offer to sell to Buyer and to each assignee permitted
under paragraph (v) below (Buyer or such assignee
being hereinafter called the "Holder") a Ratable
Portion of such New Securities on the same terms and
conditions and at the lowest price as such New
Securities are issued to any person. "Ratable
Portion" shall mean that portion of such New
Securities that bears the same ratio to all such
New Securities (including for this purpose all New
Securities which may be purchased by all Holders
pursuant to this Section 7B(f)) as the number of
Shares and Conversion Shares held by the Holder bears
to the outstanding Common Shares. "Outstanding Common
Shares" means all shares of Common Stock then
outstanding and all shares of Common Stock issuable
upon conversion of all convertible securities then
outstanding and upon exercise of warrants and options
then outstanding.
(ii) The Company shall use reasonable efforts to notify
the Holder a reasonable time prior to the initial
issuance of the New Securities and to provide the
Holder with an opportunity to participate in the
issuance contemporaneously with the first purchaser
of the New Securities; but in no event shall notice
be given later than 30 days after the issuance. Such
notice shall contain all material terms of the
issuance and of the New Securities. The Holder may
elect to exercise all or any portion of its rights
under this Section 7B(f) by giving written notice to
the Company within 15 days of the Company's notice.
If the consideration paid by others for the New
Securities is not cash, and if the electing Holder
cannot for any reason pay for the New Securities in
the form of such non-cash consideration, the Holder
may pay the cash equivalent thereof, as determined in
good faith by the Board of Directors. All payments
shall be delivered by the electing Holder to the
Company not later than the date specified by the
Company in its notice, but in no event earlier than
20 days after the Company's notice.
(iii) The provisions of this Section 7B(f) shall not apply
to shares of the Common Stock issued or issuable by
the Company which shares are excluded from the
definition of "Additional Shares of Common Stock" for
purposes of Article IV, Section 2 of the Amended
Articles.
(iv) The rights of the Holder under this Section 7B(f)
shall terminate immediately prior to the closing of
an underwritten public offering of securities by the
Company which satisfies the requirements of the
Amended Articles (as in effect at such time) for the
automatic conversion of the Series B Preferred.
(v) The Buyer's rights under this Section 7B(f) shall be
assignable only to an assignee who acquires all of
the Buyer's Shares.
7C. REGISTRATION RIGHTS.
a. PIGGYBACK REGISTRATION RIGHTS.
(i) RIGHT TO PIGGYBACK. Whenever the Company proposes to
register any stock (or securities convertible into or
exchangeable or exercisable for stock under the
Securities Act (a "Piggyback Registration"), the
Company
will give prompt written notice to Buyer of its
intention to effect such a registration and will,
subject to paragraph (a)(ii) below, include in such
Piggyback Registration all Registrable Securities
with respect to which the Company receives written
requests for inclusion therein within fifteen (15)
days after receipt of the Company's notice.
Registrable Securities with respect to which such
request for registration has been received will be
registered by the Company and offered to the public
on the same terms and conditions applicable to the
stock to be sold by the Company or by the person
selling under such proposed registration.
(ii) PRIORITY ON PIGGYBACK REGISTRATIONS. If the managing
underwriter advises the Company that in its opinion
the number of securities proposed to be sold exceeds
the number which can be sold in such offering, the
Company will include in such registration the number
of securities which, in the opinion of such
underwriter or underwriters, can be sold as follows:
(1) first, the stock the Company proposes to sell,
(2) second, the Registrable Securities requested to
be included in such registration, by the Buyer which
have requested their Registrable Securities to be
included therein, and (3) third, other Shares
requested to be included in such registration.
(iii) SELECTION OF UNDERWRITERS. If any Piggyback
Registration is an underwritten offering, the Board
of Directors of Company shall have the right to
select a managing underwriter or underwriters to
administer the offering.
b. PUBLIC SALE BY HOLDER OF REGISTRABLE SECURITIES. The Buyer, if
requested by the managing underwriter or underwriters for any
underwritten Piggyback Registration, agrees not to effect any
public sale or distribution of Registrable Securities,
including a sale pursuant to Rule l44 (or any similar
provision then in force) under the Securities Act, during the
one hundred eighty (180) day period beginning on the effective
date of such Piggyback Registration.
c. REGISTRATION EXPENSES. All of the costs and expenses of each
Registration hereunder will be borne by the Company; provided,
that the Company shall not bear any underwriters' commissions,
brokerage fees, transfer taxes, or the fees and expenses of
any accountants or other representatives retained by the Buyer
except for the fees and expenses of one counsel chosen by the
Buyer.
d. INDEMNIFICATION. This clause (d) shall only be applicable in
regard to this Section 7C.
(i) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify, to the full extent permitted by law, the
Buyer, its officers and directors and each Person who
controls Buyer (within the meaning of the Securities
Act and the Securities Exchange Act of 1934, as
amended (the
"Exchange Act") against all losses, claims, damages,
liabilities and expenses caused by any untrue or
alleged untrue statement of a material fact contained
in any registration statement, prospectus or
preliminary prospects or any omission or alleged
omission to state therein a material fact necessary
to make the statements therein (in the case of the
prospectus or any preliminary prospectus, in light of
the circumstances under which they were made) not
misleading, except insofar as the same are caused by
or contained in any information with respect to Buyer
furnished in writing to the Company by Buyer
expressly for use therein.
(ii) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES.
In connection with any Registration Statement in
which Buyer is participating, Buyer will furnish to
the Company in writing such information and
affidavits with respect to Buyer as the Company
requests for use in connection with any registration
statement or prospectus and agrees to indemnify, to
the full extent permitted by law, the Company, its
directors and officers and each Person who controls
the Company (within the meaning of the Securities Act
and the Exchange Act) against any losses, claims,
damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of a material fact
or any omission or alleged omission to state a
material fact necessary to make the statements in the
registration statement or prospectus or preliminary
prospectus (in the case of the prospectus or any
preliminary prospectus, in light of the circumstances
under which they were made) not misleading, to the
extent, but only to the extent, that such untrue
statement or omission is contained in any information
or affidavit with respect to Buyer so furnished in
writing by Buyer. In no event shall the liability of
any selling holder of Registrable Securities
hereunder be greater in amount than the dollar amount
of the proceeds received by such holder upon the sale
of the Registrable Securities giving rise to such
indemnification obligation.
(iii) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person
entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of
any claim with respect to which it seeks
indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest
may exist between such indemnified and indemnifying
party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified
party. Whether or not such defense is assumed by the
indemnifying party, the indemnifying party will not
be subject to any liability for any settlement made
without its consent (but such consent will not be
unreasonably withheld). No indemnifying party will
consent to entry of any judgment or enter into any
settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from any
liability in respect of such claim or litigation. An
indemnifying party who
is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of
interest may exist between such indemnified party and
any other such indemnified parties with respect to
such claim, in which event the indemnifying party
shall be obligated to pay the fees and expenses of
such additional counsel.
(iv) CONTRIBUTION. If for any reason the indemnification
provided for in the preceding clauses (i) and (ii) is
unavailable to an indemnified party or insufficient
to hold it harmless as contemplated by the preceding
clauses (i) and (ii), then the indemnifying party
shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim,
damage or liability in such proportion as is
appropriate to reflect not only the relative benefits
received by the indemnified party and the
indemnifying party, but also the relative fault of
the indemnified party and the indemnifying party, as
well as any other relevant equitable considerations,
provided that Company shall be required to contribute
an amount greater than the net proceeds from the sale
of the Shares.
Section 8 RESTRICTIONS ON TRANSFERABILITY OF SHARES: COMPLIANCE WITH SECURITIES
ACT.
8A. RESTRICTIONS ON TRANSFERABILITY. The Shares shall not be sold,
assigned, transferred or pledged except upon the conditions specified in this
Section 8. The Buyer will cause any proposed purchaser, assignee, transferee, or
pledgee of the Shares held by the Buyer to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Section 8 and in the Registration Rights Agreement.
8B. RESTRICTIVE LEGEND. Each certificate representing (i) the Shares
and (ii) any other securities issued in respect of the Shares upon any stock
split, stock dividend, recapitalization, merger, consolation or similar event,
shall (unless otherwise permitted by the provisions of Section 9C below) be
stamped or otherwise imprinted with a legend in the following form (in addition
to any legend required under applicable state securities laws):
THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN SERIES B PREFERRED
STOCK PURCHASE AGREEMENT BY AND BETWEEN THE SHAREHOLDER, THE
CORPORATION AND CERTAIN HOLDERS OF SECURITIES OF THE CORPORATION.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE CORPORATION.
The Buyer consents to the Company making a notation on its records and
giving instructions to any transfer agent of the Shares in order to implement
the restrictions on transfer established in this Section 8.
8C. CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF DELAWARE AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE DELAWARE
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
Section 9 DEFINITIONS
9A. AFFILIATE. "Affiliate" shall mean any Person which owns an interest
in Buyer or any Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Buyer or any of its shareholders.
9B. BUSINESS. "Business" shall mean ordinary course of business of the
Company which provides a consumer marketplace for insurance education and sales
over the Internet or private intranets including the provision of insurance
rating software and related services or products to the Company customers.
9C. PROPRIETARY RIGHTS. "Proprietary Rights" means all (a) patents,
patent applications, patent disclosures, and improvements thereto, (b)
trademarks, service marks, trade dress, logos, trade names, product names and
corporate names and registrations and applications for registration thereof, (c)
copyrights and registrations and applications for registration thereof, (d) mask
works and registrations and applications for registration thereof, (e) computer
software, data, and documentation, (f) trade secrets and confidential business
information know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial, marketing, and
business data, pricing and cost information, business and marketing plans, and
customer and supplier lists and information, (g) other intellectual property,
and (h) copies and tangible embodiments thereof in whatever form or medium.
9D. PERSON. "Person" shall mean an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated association and a governmental entity.
Section 10 INDEMNIFICATION
10A. BASIC RIGHT OF BUYER. Notwithstanding the Closing, the delivery of
the Shares and regardless of any investigation at any time made by or on behalf
of Buyer, the Company indemnifies and agrees to defend, save and hold Buyer, and
any stockholder, subsidiary or Affiliate of Buyer, harmless in the event that
Buyer, or any stockholder, subsidiary or Affiliate of Buyer, shall at any time
or from time to time suffer or become obligated to pay any damage, liability,
loss, cost, expense, claim, cause or causes of action (including all reasonable
attorneys' fees) ("Indemnifiable Losses") arising out of or resulting from: (i)
any
untruth or inaccuracy in any representation of the Company or the breach of any
warranty of the Company; (ii) any failure of the Company duly to perform or
observe any terms, provisions, covenants, agreements or conditions of this
Agreement on the part of the Company to be performed or observed; (iii) any
exhibit, certificate or other document furnished by the Company (or any
representative of a Company) to Buyer (or any representative of the Buyer); (iv)
any fine, penalty, franchise tax, income tax or other tax or amount imposed by
any state as a result of Company's business activities in that state prior to
Closing; (v) and all claims, demands, suits, actions, losses or judgments
(including legal expenses and costs incident to the matters indemnified against
in this paragraph 10A, (the events described in (i) through (v) collectively are
"Events of Breach"); PROVIDED however, that the Company shall have no obligation
to make any payment to Buyer under this Section 10A unless the aggregate amount
to which Buyer is entitled by reason of all claims under this Section 10A
exceeds $50,000 (it being understood that once such amount is exceeded, the
aggregate of all claims under this Section 10A shall be payable by Company on
demand by the Buyer) and unless, (i) with respect to any claim arising out of
any misrepresentation or incorrect warranty or failure to perform or observe any
terms, provision, covenant, agreement or condition required by the Agreement to
be performed or observed on or before the Closing, notice of such claim is given
by Buyer to the Company within two years after the Closing; and (ii) with
respect to any failure to perform or observe any term, provision, covenant,
agreement or condition required by this Agreement to be performed or observed
after the Closing, notice of such claim is given by Buyer to Company within five
years after such failure (six years in the case of the Event of Breach relating
to any representation as to tax matters).
10B. PROCEDURE. In the event that any suit, action, investigation,
claim or proceeding is begun, made or instituted as a result of which the
Company may become obligated to Buyer hereunder, Buyer shall give written notice
thereof to the Company. The Company agrees, at the option of the Buyer either
(a) to defend, contest or otherwise protect Buyer against any such suit, action,
investigation, claim or proceeding at their sole cost and expense, or (b) pay
the Buyer's costs and expenses, including attorneys' fees, of any such defense.
Buyer shall have the right to so defend or contest, including without
limitation, the right to make any compromise or settlement thereof.
Section 11 MISCELLANEOUS
11A. REMEDIES. Each party to this Agreement will have the rights and
remedies set forth in this Agreement, and all rights and remedies which such
parties have been granted at any time under any other agreement or contract and
all of the rights which such parties have under any law. Any Person having any
rights under any provision of this Agreement will be entitled to enforce such
rights specifically, to recover damages by reason of any breach of any provision
of the Agreement and to exercise all other rights granted by law.
11B. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and indemnity provisions contained herein or made in writing by any
party in connection herewith shall survive the execution and delivery of this
Agreement, regardless of any investigation made by the Buyer or the Company or
on their behalf.
11C. ENTIRE AGREEMENT. This Agreement (together with the exhibits and
schedules hereto) contains all of the terms and conditions agreed upon by the
parties hereto with reference to the subject matter hereof with regard to such
subject matter. No other agreements not specifically referred to herein, oral or
otherwise, shall be deemed to exist or to bind any of the parties hereto with
regard to such subject matter. No officer or employee of any party has any
authority to make any representation or promise not contained in this Agreement,
and each of the parties hereto agrees that it has not executed this Agreement in
reliance upon any such representation or promise.
11D. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
11E. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one and
the same Agreement.
11F. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
11G. GOVERNING LAW. All questions concerning the construction, validity
and interpretation of this Agreement and the exhibits and schedules hereto will
be governed by the internal law, and not the law of conflicts, of California.
11H. NOTICE. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally or
mailed by certified or registered mail, return receipt requested and postage
prepaid, to the recipient. Such notices, demands, and other communications will
be sent to the Company and to the Buyer at their respective addresses indicated
below:
Buyer:
AMS Services, Inc.
000 Xxxxxxxxxx Xxxx
Tower 0, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: General Counsel
Company:
InsWeb Corporation
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: General Counsel
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
11I. ENFORCEMENT. In the event suit is brought to enforce or interpret
any part of this Agreement or the rights or obligations of any party to this
Agreement, the prevailing party shall be entitled to recover as an element of
such party's costs of suit, and not as damages, a reasonable attorney's fee to
be fixed by the court. The prevailing party shall be the party who is entitled
to recover his costs of suit whether or not the suit proceeds to final judgment.
A party not entitled to cover his costs shall not recover attorney's fees.
11J. AMENDMENT. This Agreement may not be changed, amended, terminated
or superseded orally, nor may any of the provisions hereof be waived orally, but
only by an instrument in writing, signed in each case by an authorized officer
of Company and an authorized officer of Buyer.
11K. CONFIDENTIALITY. It is understood and agreed between the parties
hereto that the parties are best served by keeping the financial terms of this
Agreement confidential and each party hereby agrees that it will use its
reasonable efforts to not, through its agents, officers, directors, employees,
or by any other means, disclose to any third parties the financial terms of this
Agreement; excepting only to counsel, accountants or other agents necessary to
consummate the transactions contemplated herein or with the written consent of
the other party, for a period of thirty-six (36) months following the Closing
except (a) to the extent that such information is required in response to any
summons or subpoena or in connection with any litigation, (b) to the extent that
such information is believed to be required in order to comply with any law,
order, regulation or ruling applicable to such party disclosing such
information, (c) to the extent that such information subsequently becomes known
to the party disclosing such information through any Person other than a Person
whom the disclosing party knows to be acting in violation of his or its
obligations to the non-disclosing party and (d) to obtain additional financing
or investment in the Company but only pursuant to a written confidentiality
agreement with such third party.
11L. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press releases and public announcements relating to the subject matter of this
Agreement without the prior written approval of the Buyer and the Company;
provided, however, that any party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing party
will use its best efforts to advise the other parties prior to making the
disclosure).
11M. EXPENSES. The Company and the Buyer shall each bear its own costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby.
11N. CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of interest or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation.
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed and delivered on the date set forth below but
intending for all purposes to evidence a formation agreed to and effective as
of the date first written above.
BUYER:
Insurance Information Exchange, L.L.C.
By: /s/ Xxxxx Xxxxxx
-------------------------
Xxxxx Xxxxxx, President
Date
------------------
COMPANY:
InsWeb Corporation
By /s/ XXXXXXX X. XXXXXXXXX Attest
---------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Date
------------------------------ ----------------------------------
Secretary (Seal)
LIST OF EXHIBITS AND SCHEDULES
SECTION DESCRIPTION PROVIDED BY
3B Exhibit A Subject for Company iiX
Counsel's Opinion
3L Exhibit B Other Agreements iiX and InsWeb
5A Schedule 5A Capital Stock InsWeb
5E Schedule 5E List of Developments InsWeb
5F Schedule 5F Adverse Changes InsWeb
5G Schedule 5G Exceptions to Title and InsWeb
Conditions of Assets
5I Schedule 5I Tax Exceptions InsWeb
5J Schedule 5J List of Contracts and InsWeb
Commitments
5K Schedule 5K List of Proprietary Rights InsWeb
5L Schedule 5L Litigation Pending InsWeb
5N Schedule 5N Insurance Schedule (List of InsWeb
Company Insurance Policies)
5O Schedule 5O Non-Compete and other
Agreements in Effect InsWeb
5P Schedule 5P List of Employee Benefits InsWeb
5Q Schedule 5Q Compliance with Laws InsWeb
5S Schedule 5S Officers and Directors InsWeb
Currently in Office
5V Schedule 5V Product Warranties InsWeb
